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Speaker 1: of this podcast. This is the Bloomberg Surveillance Podcast. I'm

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Speaker 1: Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. Join

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Speaker 1: Right now, what we're gonna do is do what Bloomberg

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Speaker 1: Surveillance does best, which give you an informed debate on

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Speaker 1: the issues at hand. Lisa Bramwinson, Tom King, John Pharaoh

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Speaker 1: and Assignment and joining us now is Adam Posen. He's

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Speaker 1: president of the Peterson Institute for International economics. He's one

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Speaker 1: of our great American scholars on Germany, and far more

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Speaker 1: than that, had a tour of duty as Megan Green

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Speaker 1: trots over across the Atlantic here in the coming weeks.

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Speaker 1: Adam Posen at the Bank of England years ago, two

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Speaker 1: days ago, Adam Posen, you made clear that we would

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Speaker 1: see six percent plus interest rates by central banks, and

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Speaker 1: particularly by the Bank of England. Will that level? Will

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Speaker 1: that crush the United Kingdom economy?

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Speaker 2: It's gonna hurt, There's no question, Tom, Thank you and

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Speaker 2: Lisa for having me back. The issue is that from

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Speaker 2: the start of this inflationary period in the UK, along

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Speaker 2: with the Euro Area, the Bank of England MPCI majority

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Speaker 2: the governor have kept talking as though they weren't going

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Speaker 2: to have to raise rates that much, even though they

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Speaker 2: had kept raising them. They kept talking as though they

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Speaker 2: didn't need to go much further. They probably wouldn't need

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Speaker 2: to go much further. Whereas from the start you had

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Speaker 2: a UK from twenty twenty one onwards that had the

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Speaker 2: worst aspects of US labor markets made words by Brexit

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Speaker 2: and EU Euro Area exposure to energy shots from Russia

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Speaker 2: had them both and have less credibility post Brexit and

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Speaker 2: post all the political shenanigans, some five prime ministers in

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Speaker 2: seven years, so ultimately it never made any sense that

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Speaker 2: the UK was going to add up with a lower

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Speaker 2: terminal rate for its central bank tightening than the Fed

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Speaker 2: or the ECV.

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Speaker 1: This is important, folks. I'm gonna get the theory out

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Speaker 1: of the way here. There's a blistering essay this morning

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Speaker 1: in the Telegraph from Ambrose Evans Pritchard, hugely controversial, but

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Speaker 1: within it doctor Posen he alludes to Emery Lactose's idea

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Speaker 1: half a country a go of a research program of

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Speaker 1: where you get a set of beliefs going, and boy,

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Speaker 1: you're gonna stick with your research program. Right or wrong?

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Speaker 1: Does the Bank of England have a flawed research program?

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Speaker 1: And do they need to amend it pronto?

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Speaker 2: I fear that they have taken too seriously some of

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Speaker 2: the some of their models. All central banks have investment

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Speaker 2: in their models. But one of the good things that

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Speaker 2: happened at the Bank of England when I was there

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Speaker 2: during the global financial crisis, and then most of the

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Speaker 2: other central banks, was you realized, under those circumstances you

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Speaker 2: put the model aside, you don't use it if it's

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Speaker 2: not realistic. Unfortunately, to me, the Bank has been relying

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Speaker 2: on a couple mistaken assumptions or worldview. First that there

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Speaker 2: was no erosion and credibility of the overall UK macro

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Speaker 2: policy regime post brings in post politics, which clearly is

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Speaker 2: not true. And second that if there was going to

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Speaker 2: be a major real income shock, which they did rightly

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Speaker 2: call that that would lead to a decline in nominal

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Speaker 2: wage growth, and that was clearly mistaken. And I and

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Speaker 2: others than other former NPC members like sister Widwani, we're

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Speaker 2: pointing this out as an error at the end of

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Speaker 2: twenty twenty one in their forecast, and they didn't come

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Speaker 2: off that until very recently. I'm not conceptual like Ambrose.

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Speaker 2: I'm not going to say is this a lot Ca

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Speaker 2: toast moment or you change of para all that, But

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Speaker 2: I think over the last year and a half two

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Speaker 2: years they have stuck with some model assumptions that were

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Speaker 2: publicly questioned and some of the members, the external members

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Speaker 2: of the committee also questioned, Adam.

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Speaker 3: Are there parallels with the UK and the US and

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Speaker 3: the Federal Reserve which is currently at a precipice of

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Speaker 3: a pretty key moment.

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Speaker 2: At least, I think it's fair to draw the parallel.

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Speaker 2: I think, just as with our markets with energy shocks,

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Speaker 2: it's worse than the UK. Unfortunately in this instance, because

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Speaker 2: it took the FED a while to change their view

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Speaker 2: on inflation. A bunch of us were beating the drum

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Speaker 2: for them to do that starting at the first quarter

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Speaker 2: of twenty twenty one. But the bottom line is they

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Speaker 2: did significantly change it by summer of twenty twenty two,

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Speaker 2: and they clearly from the testimony, they don't have a

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Speaker 2: full strategy, but they are aware inflation is job one.

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Speaker 2: They are aware it's trend inflation. They are aware that

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Speaker 2: it wasn't the transitory stuff. So I think the FED

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Speaker 2: got out of its own way to some degree.

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Speaker 3: We are discussing this concern about whether the FED can

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Speaker 3: get down to a two percent inflation rate without causing pain,

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Speaker 3: that perhaps people are unprepared for something that you raised

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Speaker 3: a while ago, that perhaps it's just better to get

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Speaker 3: to a three percent rate and be more comfortable with

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Speaker 3: that higher rate. Where are you now in terms of

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Speaker 3: what the FED has done and where it is heading

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Speaker 3: in terms of inflation rate based on how much it's

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Speaker 3: raised rates so far.

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Speaker 2: I would love for Chris Waller and others to write,

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Speaker 2: love to see vacancies continue to come down without unemployment

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Speaker 2: rising and the pass through from all the previous shocks

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Speaker 2: to be weeded out and therefore not have to have

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Speaker 2: a much higher rate. I think that is a very

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Speaker 2: bad gamble. I'm in fact more hawkish than even some

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Speaker 2: of my colleagues on this, even though I'm known p

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Speaker 2: obviously as an inflation dom because I see US as

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Speaker 2: having such tight labor markets in the US and such

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Speaker 2: trend inflation persisting even though it's coming off some that

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Speaker 2: you're going to need real contraction in the credit markets

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Speaker 2: to get where you need to go.

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Speaker 3: This is really important, Adam. What's required in terms of

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Speaker 3: how high rates to have to go in order to

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Speaker 3: get real contraction in credit markets that are resilient.

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Speaker 4: Well, I mean, one.

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Speaker 2: Way to look at it is that we finally, over

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Speaker 2: the last few months, have spreads on quality spreads between

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Speaker 2: you know, different classes of bonds or government borrowers versus

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Speaker 2: private sector borrowers that are consistent with the tightening cycle.

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Speaker 2: We haven't seen spreads be that wide, very wide at all,

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Speaker 2: until very recently. So similarly, if you, however, you want

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Speaker 2: to compute what you think the real interest rate is.

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Speaker 2: We are just now getting to positive really, and so

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Speaker 2: to me it's we are only now getting to type policy.

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Speaker 2: And especially since the residential construction and employment proved very

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Speaker 2: resilient to interest rate rises in a way that we

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Speaker 2: have not seen before. That to me is the biggest

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Speaker 2: surprise in the US. It tells us that the amount

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Speaker 2: of monetary tightening has been done so far as sufficient. Now,

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Speaker 2: maybe what we're just now gotten over the last couple

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Speaker 2: of months will prove sufficient, But I'd rather air on

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Speaker 2: the side of tightening more and that the US economy

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Speaker 2: he won't fall into recession.

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Speaker 1: We've got some time for one more question here, Adam.

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Speaker 1: We're going to bring you over to the next half hour, Folks,

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Speaker 1: this conversation is so important without imposing the Peterson Institute.

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Speaker 1: It's real simple, Adam. There's a whole school of thought

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Speaker 1: out there with disinflationary vectors in place, and we're being successful.

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Speaker 1: And I want to talk about the naval gazing of

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Speaker 1: do we get back to two percent or whatever in

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Speaker 1: the next section. But right now, are you suggesting that

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Speaker 1: we completely misjudge how we will extend the X axis

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Speaker 1: of these high interest rates, and we will see a

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Speaker 1: five percent or dare I say six percent millu well

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Speaker 1: out into twenty twenty four.

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Speaker 2: My central call is that they're going to get above

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Speaker 2: five point five before the end of the year, and

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Speaker 2: it's going to remain there into at least second quarter

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Speaker 2: of twenty twenty four. And unlike some other people, I

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Speaker 2: think that the risk is more that they may have

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Speaker 2: to do more than that, and not so much that

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Speaker 2: they're going to have to do less than that.

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Speaker 1: What we're doing, we're talking to a cross section of people,

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Speaker 1: and we've certainly seen that in views on the equity markets,

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Speaker 1: some huge caution, some optimism, blinding neutrality from US Wealth Bank,

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Speaker 1: and we're also driving forward the conversation wrapped around theory

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Speaker 1: under question for Global Wall Street. This has been a

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Speaker 1: joy for the last fifteen minutes without im posing and

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Speaker 1: we continue now and with me as well, is Michael McKee,

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Speaker 1: our Bloomberg International Economics and Policy and Theory correspondent. When

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Speaker 1: the theory's thrown out the window? Mike mckaty, you first

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Speaker 1: question for you, and that is how bad has the

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Speaker 1: theory been blown out the window? I mean, I mean

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Speaker 1: a posin has to act posing like and you know,

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Speaker 1: future central banker like you don't.

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Speaker 5: Well, I was listening to Adam earlier and I think

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Speaker 5: he's that it's not just the Bank of England, it's

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Speaker 5: all economists basically work off of models that have worked

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Speaker 5: for twenty twenty five thirty years that aren't working anymore now.

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Speaker 5: Some discarded those faster than others, and certainly you could

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Speaker 5: say the Fed did not, the Bank of England did not.

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Speaker 5: But now they are to varying degrees adjusting. And that's

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Speaker 5: the question, though, what do you do? Where do you go?

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Speaker 1: If the model doesn't work?

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Speaker 5: You can try to figure out why and readjust a model,

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Speaker 5: but they become more guidance than any kind of a

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Speaker 5: real path forward.

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Speaker 1: We continue with that, imposing the president of the Peterson

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Speaker 1: Institute for International Economics, Adam, I'm going to get right

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Speaker 1: to it and frame here the path down to three

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Speaker 1: percent in a raging debate led by your work with

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Speaker 1: your colleague Olivier Blanchard John Williams as an ur starts

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Speaker 1: subdued and we will get back near twoish percent. You disagree,

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Speaker 1: But what's the nuance? Now? What's changed in where we

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Speaker 1: are heading within this new level for FED rate policy.

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Speaker 2: I don't think much has changed in the spirit of

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Speaker 2: the conversation you and Michael we're just having. I think

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Speaker 2: more needs to change. So what we had was a

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Speaker 2: series of central bankers repeatedly saying throughout the last couple

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Speaker 2: of years, do means to and then saying sato voce

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Speaker 2: but audibly, Look, it might be better to get that

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Speaker 2: to stop at three or to be slow getting to two,

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Speaker 2: but we can't admit it now. And my belief, which

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Speaker 2: was part of my belief when we were advocating and

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Speaker 2: designing inflation targets in the first place, was the point

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Speaker 2: of inflation targets was to communicate an a credible way

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Speaker 2: with the public. And so I think between a choice

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Speaker 2: of saying you're going to tow but then taking your

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Speaker 2: time about it, and then maybe in a FED review

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Speaker 2: in two years time you sort of admit that you

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Speaker 2: were not going to do is not preferable to saying

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Speaker 2: we're only going to three and since and this is

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Speaker 2: actually a virtue of how bad things are. If you

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Speaker 2: get if you take us down from eight to three,

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Speaker 2: you're still pretty credible disinflation and stuff.

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Speaker 1: What's the Venn diagram look like of Adam Posen in

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Speaker 1: a rules based John Taylor, can we be rules based

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Speaker 1: if we get back to a Posin blenchard three percent?

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Speaker 2: Well inflation targeting. The part of it I'd like to

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Speaker 2: keep is always been what I called this discipline discretion

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Speaker 2: co authorate to late Thomas Laubach, or what Bernanki and

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Speaker 2: Michigan called constrained discretion, the idea that it's intermediate between

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Speaker 2: rules and pure discretion. And I think Professor Taylor has

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Speaker 2: been right about a lot over the last couple of years,

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Speaker 2: But I still am not sold on the idea of

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Speaker 2: the rule. What I am sold on is the idea

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Speaker 2: that you can't deviate from the target without explaining yourself

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Speaker 2: and adapting the target. And so I don't know about

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Speaker 2: a ven diagram. I think we both agree, would agree

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Speaker 2: you need a lot more inflation disinflation than we've had.

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Speaker 2: That the FED was behind the curve and had a

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Speaker 2: wrong idea, But ultimately it's not because they didn't never

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Speaker 2: rules because they had a wrong idea.

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Speaker 5: Well, Adam, if I can follow up on the idea

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Speaker 5: of whether or not you want to raise the inflation target.

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Speaker 5: Do you have a lot of confidence one way or

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Speaker 5: another that two percent is wrong or three percent is

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Speaker 5: going to fit the economy that comes out of this

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Speaker 5: whole thing, because at this point it seems like we

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Speaker 5: don't really know, We don't have a good grasp on

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Speaker 5: where inflation is going and how fast.

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Speaker 2: It's fair, it's a fair question. I want to go

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Speaker 2: back to one one basic point, which was when we

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Speaker 2: an Ancunisian lawback and I wrote the inflation targeting book.

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Speaker 2: We wrote in it and assumed that inflation targets would

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Speaker 2: be reset over time. As I started saying, and I'm

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Speaker 2: only speaking for myself now, not my distinguished co authors,

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Speaker 2: as I started saying around two thousand and four, two

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Speaker 2: thousand and five, we made a mistake because people treated

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Speaker 2: these inflation targets like exchange rate targets. They were scared

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Speaker 2: to move them because they were worried it gave a

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Speaker 2: bad message. And so and there was too much convergence

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Speaker 2: among different central banks and different economies all on this

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Speaker 2: two percent, and that just reinforced it. Whereas you should

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Speaker 2: be adapting the inflation to target to the realities, not

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Speaker 2: every minute to make excuses, but every several years to

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Speaker 2: make it realistic, and so to me, there's no question

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Speaker 2: that the higher inflation target would be better. We well,

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Speaker 2: Blanchard used to talk with co authors about a four

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Speaker 2: percent target. He's now publicly said he's in favor of

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Speaker 2: a three rather two. I've always believed it should be

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Speaker 2: higher than two. Not always sorry. When I wrote the book,

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Speaker 2: I didn't, but I believed it should be moved as needed,

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Speaker 2: and since fifteen years i've believed it should be moved up.

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Speaker 2: So I think there's no harm in saying three, because

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Speaker 2: you're still going to be credible disinflating from where we

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Speaker 2: are now the three, and then you're not going to

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Speaker 2: have to go through the major pain of squeezing out

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Speaker 2: that last bit of inflation.

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Speaker 5: Well, let me ask you about another communications issue, and

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Speaker 5: that is forward guidance. The FED and other central banks

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Speaker 5: really like the idea at various times, but now it

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Speaker 5: seems like they're having trouble communicating with the markets since

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Speaker 5: they're unable to say what they're going to do next.

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Speaker 5: Is that a FED problem, a market problem? Or does

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Speaker 5: forward guidance not work as well as they thought?

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Speaker 2: Borer guits never worked as well as all? I mean

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Speaker 2: back when my first speech after leaving the Bank of

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Speaker 2: England at Jackson Hole in twenty twelve, I made a

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Speaker 2: whole point arguing that forward guidance was never going to

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Speaker 2: work well, and everything since then bears that out. But

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Speaker 2: that doesn't mean you just wander around and randomly say, oh,

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Speaker 2: here's today's data. So like I look at Bank of England.

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Speaker 2: The issue for me, I know we can talk about

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Speaker 2: the FED, but I mean the banking and the issue

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Speaker 2: for me is not that they made the wrong interest

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Speaker 2: rate hikes, because they did a lot of them pretty fast,

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Speaker 2: but that they kept saying, well, this will be the

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Speaker 2: last one and we probably don't need to do more.

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Speaker 2: We're going to be able to stop at four percent.

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Speaker 2: And so again it's not so much about for guidance,

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Speaker 2: it's about they communicated the wrong forecast. And I think

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Speaker 2: the FED or the Bank of England has to or

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Speaker 2: other central banks have to say, our forecast was wrong,

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Speaker 2: we are shifting to this forecast. This forecast may be

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Speaker 2: wrong too, but this is the best guess and therefore

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Speaker 2: you should expect ax. You're not going to be able

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Speaker 2: to do forward guidance the way you did in the crisis,

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Speaker 2: because that was meant as a substitute for policy anyways.

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Speaker 2: It was never meant to be a standalone, useful tool

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Speaker 2: in a normal situation.

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Speaker 1: I want to get back to FED policy. Got two

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Speaker 1: more questions Adam before you go. You've been very generous

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Speaker 1: with your time, and the basic one is what Mike

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Speaker 1: McKee's going to see in the press conference looking out

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Speaker 1: for five, six seven meetings as well for our audience,

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Speaker 1: what would you suggest will be the market the real

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Speaker 1: estate reaction if we get to pose in rate levels.

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Speaker 2: Thank you for generously giving me this much of surveillance time.

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Speaker 2: I think the market's going to be negative, but I

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Speaker 2: don't think in the US it's going to be disastrous,

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Speaker 2: as you and Lisa and John have repeatedly talked about. Rightly,

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Speaker 2: this has been an incredibly resilient market in equities. Even

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Speaker 2: in real estate. The the loss is commercial estate's different,

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Speaker 2: but in residential real estate the losses have not been

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Speaker 2: that large given the past run up and construction continues. So,

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Speaker 2: going back to someone who were saying earlier, Tom, I

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Speaker 2: think you're going to need in market terms, some form

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Speaker 2: of capitulation, because that's just the side effect of their

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Speaker 2: being actual tightening of credit conditions, and I think we're

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Speaker 2: just getting there. But it doesn't have to be disastrous

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Speaker 2: because we don't have the same fragility I believe in

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Speaker 2: our financial markets. We did past cycles.

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Speaker 1: At the Peterson Institute, Chad Bona with a great segment

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Speaker 1: on the historic collapse of Switzerland's watch industry. That's how

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Speaker 1: esoteric Peterson Institute can get. One of the things percolating

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Speaker 1: Adam in late June is a new bout of American exceptionalism.

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Speaker 1: Were different than they are? Is America exceptional.

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Speaker 2: In a lot of social ways, yes, and a lot

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Speaker 2: of economic ways now, so our racial divisions, our regional divisions,

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Speaker 2: our gun violence, our nativism. These are all things under

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Speaker 2: debate and which are not under debate, and a lot

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Speaker 2: of other high income economies, So we are exceptional in

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Speaker 2: our economy. The Economist, as you know, had a great

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Speaker 2: feature a little while back of great survey talking about

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Speaker 2: the ways in which the US economy powers ahead. It

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Speaker 2: remains to be seen how much of that was sustainable

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Speaker 2: versus how much of that was brief fiscal. But ultimately

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Speaker 2: there is some special sauce to the urban, innovative parts

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Speaker 2: of the US economy. In services in tech that others

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Speaker 2: have not been able to replicate, and we have to

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Speaker 2: take that. That's a blessing.

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Speaker 1: We got to leave it there, Doctor Posen, thank you

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Speaker 1: so much for a substantial mid year conversation, Adam posing

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Speaker 1: the Peterson Institute formerly is public service to the Bank

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Speaker 1: of England. Michael Collins joins now for a brief senior

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Speaker 1: portfolio manager of PGUM Fixed Income. Michael, what does this

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Speaker 1: record curve and version mean to you? How does your

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Speaker 1: world change when you see two tens one hundred and

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Speaker 1: two basis points?

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Speaker 6: Yeah, Tom and Lisa, good morning.

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Speaker 7: The dilemma out there, and one of the reasons the

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Speaker 7: Martins are so confused and everybody was confused about the

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Speaker 7: economic trajectory is that the typical models, the traditional leading

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Speaker 7: indicators like the slope of the yield curve, all of

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Speaker 7: the empirical evidence, the surveys are all pointing to recession

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Speaker 7: right pending recession doom. The problem is from the bottom up,

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Speaker 7: the fundamental analysts in US and you know, as you

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Speaker 7: know Peache and fixed income, we pride ourselves on that

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Speaker 7: bottom up analysis. I always say, sometimes the economists tell

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Speaker 7: the analysts what's.

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Speaker 6: Going to happen.

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Speaker 7: But our view is a lot of times the analysts

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Speaker 7: tell the economists what's going to happen. And when you

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Speaker 7: look at the world from the bottom up and you

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Speaker 7: look at all these companies and all these industries, and

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Speaker 7: you look at the housing market, the auto market, the

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Speaker 7: mortgage market, the banking system, it's hard to find the

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Speaker 7: areas where you're going to see a big collapse in activity,

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Speaker 7: in demand, in lending in and a big surge in default.

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Speaker 7: So we're kind of splitting the difference and just assuming

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Speaker 7: that growth is going to slow, you have a moderation

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Speaker 7: and growth, moderation and inflation, but there's really low risk

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Speaker 7: of a deeper session.

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Speaker 1: Here within that analysis, do you go load the boat

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Speaker 1: on garbage corporate or dare I say high yield distress?

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Speaker 1: Or do you take the middle ground of equality corporate

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Speaker 1: versus full faith and credit.

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Speaker 6: Yeah, it's the latter for sure.

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Speaker 7: I mean, what happens at this point to cycle Tom

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Speaker 7: with the Fed and all these other central banks having

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Speaker 7: tightened policies.

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Speaker 6: So aggressively, it does start to bite.

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Speaker 7: And it is starting to bite the weakest credits, the

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Speaker 7: weakest people, the weakest governments, and you're seeing the most

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Speaker 7: levered credits, the ones that are exposed to floating rates,

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Speaker 7: whether they're loan issuers or whether they're commercial real estate borrowers,

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Speaker 7: they are starting to get hit, right. So those are

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Speaker 7: the areas of the market you really want to be

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Speaker 7: careful with and avoid. The good news is, as we've

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Speaker 7: talked about with you many times, the higher quality parts

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Speaker 7: of the market are still for sale. They're offering tremendous spreads,

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Speaker 7: tremendous yields to kind of sit up in quality and

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Speaker 7: print you know, six handle coupons while you wait.

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Speaker 3: Michael, I have to be honest. A lot of people

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Speaker 3: have come on this show and they say, you know,

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Speaker 3: you've come up with a theory, and you hold it

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Speaker 3: for a longer period of time. You try to ignore

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Speaker 3: the noise of all the mood swings, and we come

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Speaker 3: up here and we say, yeah, yeah, yeah, But our

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Speaker 3: job every day is to gauge the mood swings and

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Speaker 3: figure out how the shifts are happening. Today, there is

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Speaker 3: a material shift after a week of hawkish speak from

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Speaker 3: a lot of central bankers around the world. Does that

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Speaker 3: shift your view at all, the sense that suddenly we're

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Speaker 3: gaming out six and a quarter percent ECB rates that

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Speaker 3: the FED possibly is going to go even two more

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Speaker 3: times this year.

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Speaker 7: Yeah, I mean this happens every FED cycle, Lisa. The

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Speaker 7: markets kind of have these blow off tops. Maybe we've

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Speaker 7: just seen that credit spreads rally. We've just seen that

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Speaker 7: there's this enthusiasm right at the end of the FED

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Speaker 7: hiking cycle that Wow, the economy is doing good. And

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Speaker 7: the reason the Fed's able to continue hike and these

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Speaker 7: other central banks are able to continue to hike is

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Speaker 7: because the economy doing good and it does well until

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Speaker 7: it doesn't, right, And so we're probably at one of

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Speaker 7: those precipices right now where we're peaking in optimism, peaking

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Speaker 7: in sentiment and growth, and you're going to start seeing

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Speaker 7: the slide. You're going to start seeing those problems emerge,

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Speaker 7: those cracks start to increase. Growth and inflation are going

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Speaker 7: to be lower in six and twelve months from now

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Speaker 7: than they are today. But again, the point is it's

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Speaker 7: not going to be one of these existential credit crises

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Speaker 7: that we've become so accustomed to experiencing. So you wait,

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Speaker 7: you have to be patient, you wait for those cracks,

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Speaker 7: and then you jump in. I mean, look at the

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Speaker 7: regional banks. We've been underweight regional banks. A lot of

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Speaker 7: them just issued the big super regionals and we covered

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Speaker 7: and went to an overweight.

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Speaker 6: Right, those are the types of things you have to

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Speaker 6: be patient for.

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Speaker 3: This is something we're not used to. It's not two

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Speaker 3: thousand and eight. Everyone was looking for a two thousand

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Speaker 3: and eight corollary, but there still will be pain. How

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Speaker 3: do you game out what the right level is? What

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Speaker 3: are you looking for in terms of a selloff to

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Speaker 3: make say, hial bonds look attractive some of these other

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Speaker 3: credit instruments that you're staying away from.

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Speaker 6: Yeah, the mistake.

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Speaker 7: A lot of folks are making leases. They're looking at

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Speaker 7: all the historical relationships, right, They're looking at high yield spreads,

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Speaker 7: and a typical recession go out to eight hundred basis

438
00:24:16,160 --> 00:24:19,359
Speaker 7: points or one thousand basis points, and in today's world,

439
00:24:19,480 --> 00:24:22,119
Speaker 7: that would be a fifteen percent yield, right, which is

440
00:24:22,200 --> 00:24:24,720
Speaker 7: which is kind of armageddon. They expect high yield the

441
00:24:24,760 --> 00:24:27,679
Speaker 7: faults to hit ten percent. That's because they're looking at

442
00:24:27,680 --> 00:24:30,119
Speaker 7: the old models, looking at some of the past recessions

443
00:24:30,280 --> 00:24:32,200
Speaker 7: where you had a lot of leverage, where you had

444
00:24:32,280 --> 00:24:35,480
Speaker 7: a lot of excesses and credit build ups. You do

445
00:24:35,640 --> 00:24:38,639
Speaker 7: not have that now, So ar Mantra is you know,

446
00:24:38,720 --> 00:24:41,159
Speaker 7: six hundred spread on the high heeld market is the

447
00:24:41,200 --> 00:24:42,080
Speaker 7: new eight hundred.

448
00:24:42,160 --> 00:24:42,280
Speaker 8: Right.

449
00:24:42,320 --> 00:24:44,920
Speaker 7: If you get into the fives, you're buying high yield

450
00:24:44,920 --> 00:24:46,840
Speaker 7: in terms of spread, that's a you know, that's still

451
00:24:46,840 --> 00:24:48,879
Speaker 7: a ten or low double digit coupon.

452
00:24:49,280 --> 00:24:51,800
Speaker 1: Michael, let's go into quality right now. I just looked

453
00:24:51,800 --> 00:24:55,320
Speaker 1: at the Apple of two thousand and thirty three. The

454
00:24:55,440 --> 00:24:59,560
Speaker 1: Apple piece out ten years is half a percentage point

455
00:24:59,600 --> 00:25:03,560
Speaker 1: fifty nine basis points over treasuries. You can look at those, folks.

456
00:25:03,560 --> 00:25:05,879
Speaker 1: So you acclaim why a screen and the d d

457
00:25:06,080 --> 00:25:08,240
Speaker 1: ice screen and the Bloomberg This is how we invented

458
00:25:08,280 --> 00:25:11,960
Speaker 1: the company. But the company wasn't invented over Bloomberg surveillance.

459
00:25:12,000 --> 00:25:14,840
Speaker 1: It was invented over bond analysis. In case there was

460
00:25:14,840 --> 00:25:20,280
Speaker 1: any confusion there, Michael, is Apple debt, full faith and credit.

461
00:25:21,240 --> 00:25:23,639
Speaker 7: You know, the amount of cash some of those big

462
00:25:23,760 --> 00:25:27,560
Speaker 7: tech companies have tom is really amazing, and Apple's right

463
00:25:27,560 --> 00:25:29,359
Speaker 7: at the top of the list. And all these big

464
00:25:29,400 --> 00:25:31,600
Speaker 7: tech companies, you know, we look at their equities and

465
00:25:31,600 --> 00:25:34,600
Speaker 7: they're volatile, and their high beta and fixed income land.

466
00:25:34,640 --> 00:25:37,320
Speaker 7: A lot of those big you know, super megacap tech

467
00:25:37,320 --> 00:25:39,920
Speaker 7: companies are the double a's and triple a's, you know,

468
00:25:39,960 --> 00:25:44,960
Speaker 7: they're the old exxons and banks of yesteryear. They're like

469
00:25:45,000 --> 00:25:48,200
Speaker 7: the utilities because they have so much cash. They print cash.

470
00:25:48,359 --> 00:25:50,960
Speaker 7: They could pay off all their debt tomorrow if they want.

471
00:25:51,080 --> 00:25:54,520
Speaker 7: Right though, the spreads you mentioned are really tight, there's

472
00:25:54,600 --> 00:25:55,600
Speaker 7: no value there.

473
00:25:56,520 --> 00:25:57,440
Speaker 6: We don't own those.

474
00:25:57,440 --> 00:26:01,440
Speaker 7: We're typically underweight that whole sector in the bond market

475
00:26:01,840 --> 00:26:03,800
Speaker 7: and focus on the areas where you get more spread.

476
00:26:03,800 --> 00:26:05,160
Speaker 6: I mean, you could sell Apple.

477
00:26:04,880 --> 00:26:07,960
Speaker 7: At fifty nine basis points tom and buy a triple

478
00:26:08,000 --> 00:26:10,639
Speaker 7: A rated COLO. I know that's a dirty word for

479
00:26:10,680 --> 00:26:15,040
Speaker 7: some people. At almost three or four times that spread

480
00:26:15,200 --> 00:26:17,520
Speaker 7: or excess return, that is a home run. That's an

481
00:26:17,560 --> 00:26:19,720
Speaker 7: easy trade, and we have that on in a big way.

482
00:26:19,800 --> 00:26:22,200
Speaker 1: Michael Collins. You bring me to tears. Thank you so much,

483
00:26:22,240 --> 00:26:28,440
Speaker 1: Michael Collins. With p Jim, we're going to drive forward

484
00:26:28,480 --> 00:26:30,119
Speaker 1: here in a debate on the market, and as we

485
00:26:30,160 --> 00:26:33,159
Speaker 1: talk to people really cautious this morning, let's talk to

486
00:26:33,200 --> 00:26:37,399
Speaker 1: somebody fair and balanced. Linda doesilll decades of experience with

487
00:26:37,480 --> 00:26:39,600
Speaker 1: Steve Authen the team it federated him. As she was

488
00:26:39,680 --> 00:26:42,720
Speaker 1: lights out last time she was on, are you guys

489
00:26:42,800 --> 00:26:46,840
Speaker 1: bullser bears, I mean, Federated has such a venerated steady

490
00:26:46,880 --> 00:26:49,439
Speaker 1: as we go? Are you bullser bears?

491
00:26:49,480 --> 00:26:53,320
Speaker 9: Linda, Well, you know, it's good morning and it's hard

492
00:26:53,320 --> 00:26:55,520
Speaker 9: to say bullser bears. You talking about what kind of

493
00:26:55,560 --> 00:26:58,040
Speaker 9: landing we were having. We've been saying for the past

494
00:26:58,080 --> 00:27:00,840
Speaker 9: that's say, twelve months, we'll have a rocky land and

495
00:27:00,880 --> 00:27:03,040
Speaker 9: that does include kind of the rolling recession that you

496
00:27:03,080 --> 00:27:06,919
Speaker 9: were speaking about earlier on and so you know, it

497
00:27:06,960 --> 00:27:09,480
Speaker 9: would have been a lot rockier in the stock market

498
00:27:09,800 --> 00:27:12,800
Speaker 9: as we were expecting to maybe even test those lows

499
00:27:13,080 --> 00:27:16,600
Speaker 9: if we didn't have that AI narrative that went on

500
00:27:16,760 --> 00:27:19,240
Speaker 9: and then the run up and the big big stocks

501
00:27:19,680 --> 00:27:23,119
Speaker 9: because as we all know, underneath the surface, the average

502
00:27:23,119 --> 00:27:24,840
Speaker 9: stock is only up a couple percent.

503
00:27:24,600 --> 00:27:25,120
Speaker 4: Year to date.

504
00:27:25,560 --> 00:27:27,480
Speaker 3: Linda, do you think this is a tipping point in

505
00:27:27,560 --> 00:27:30,520
Speaker 3: terms of an understanding of how far central bankers are

506
00:27:30,560 --> 00:27:33,400
Speaker 3: willing to go and what that means for the revenues

507
00:27:33,480 --> 00:27:35,000
Speaker 3: of a lot of stocks that have done pretty well

508
00:27:35,040 --> 00:27:35,400
Speaker 3: this year?

509
00:27:36,600 --> 00:27:38,280
Speaker 4: Well, no, I don't particularly think so.

510
00:27:38,320 --> 00:27:40,720
Speaker 9: I mean I realized that they made a big move

511
00:27:40,760 --> 00:27:44,200
Speaker 9: over in the UK, and thank goodness, we're in the

512
00:27:44,280 --> 00:27:46,359
Speaker 9: US as versus the UK, they have a bigger problem

513
00:27:46,400 --> 00:27:49,880
Speaker 9: than we do on inflation. We have always said that

514
00:27:49,920 --> 00:27:53,240
Speaker 9: they will continue to bring inflation down to a level,

515
00:27:53,280 --> 00:27:55,080
Speaker 9: maybe it's three or maybe it's two. And if we

516
00:27:55,119 --> 00:27:57,680
Speaker 9: take the FED at their word for two percent, it's

517
00:27:57,720 --> 00:28:00,200
Speaker 9: going to be higher for longer. And we have said

518
00:28:00,240 --> 00:28:03,119
Speaker 9: that in federated hetermis for a very long time. The

519
00:28:03,240 --> 00:28:05,919
Speaker 9: question is, well they call victory at three percent, because

520
00:28:05,960 --> 00:28:07,919
Speaker 9: if they do, we may get out of this with

521
00:28:08,080 --> 00:28:10,800
Speaker 9: just the rocky landing. But if they don't, they will

522
00:28:10,840 --> 00:28:13,159
Speaker 9: tighten into a real recession.

523
00:28:13,760 --> 00:28:15,800
Speaker 3: So if you don't think that anything really has changed,

524
00:28:16,080 --> 00:28:17,600
Speaker 3: and we're kind of in the same place we were

525
00:28:17,720 --> 00:28:20,240
Speaker 3: two weeks ago, even though the narrative has shifted, is

526
00:28:20,280 --> 00:28:22,119
Speaker 3: this a time to buy? Is this a time to

527
00:28:22,160 --> 00:28:24,400
Speaker 3: look for some of the weakness and then say, all right,

528
00:28:24,560 --> 00:28:25,439
Speaker 3: we can step back in.

529
00:28:26,200 --> 00:28:26,400
Speaker 1: Yeah.

530
00:28:26,480 --> 00:28:29,320
Speaker 9: You know, it's interesting about the narrative shifting because you know,

531
00:28:29,480 --> 00:28:32,359
Speaker 9: get I get hundreds of emails a day from our

532
00:28:32,400 --> 00:28:34,720
Speaker 9: Wall Street sources, and it seemed like everybody got a

533
00:28:34,800 --> 00:28:38,080
Speaker 9: memo at a moment that said, okay, now we're over blocked.

534
00:28:38,520 --> 00:28:41,240
Speaker 9: Now it's time to maybe take some money off the table,

535
00:28:41,760 --> 00:28:45,400
Speaker 9: why you know, and the technicians are out there saying

536
00:28:45,440 --> 00:28:48,240
Speaker 9: maybe forty two hundred, we test forty three hundred anyway.

537
00:28:48,560 --> 00:28:51,400
Speaker 9: On the down side, July anyway is a week month.

538
00:28:51,720 --> 00:28:54,680
Speaker 9: You can use all these statistics historically and say, fundamentally,

539
00:28:54,680 --> 00:28:58,120
Speaker 9: what's going on in our economy. Fundamentally, actually the economy

540
00:28:58,160 --> 00:29:00,520
Speaker 9: is very strong. And when I think people will failed

541
00:29:00,520 --> 00:29:05,160
Speaker 9: to continue to appreciate, is still the amount of stimulus unbelievable.

542
00:29:05,240 --> 00:29:08,280
Speaker 9: Outside stimulus, I just read a statistic that said that

543
00:29:08,360 --> 00:29:11,880
Speaker 9: liquid assets for consumers are four zero point four trillion

544
00:29:11,960 --> 00:29:15,239
Speaker 9: dollars greater than what they were at the end of

545
00:29:15,320 --> 00:29:17,840
Speaker 9: twenty nineteen. And we were doing just fine at the

546
00:29:17,920 --> 00:29:18,840
Speaker 9: end of twenty nineteen.

547
00:29:19,280 --> 00:29:21,240
Speaker 1: I mean, this is really important. And I got eight

548
00:29:21,280 --> 00:29:23,840
Speaker 1: ways to go here, Linda, and I'm going to go

549
00:29:23,880 --> 00:29:27,040
Speaker 1: to what Lawrence McDonald did in a terrific essay this week.

550
00:29:27,400 --> 00:29:32,880
Speaker 1: He outlined the wall of money and ETF's mutual funds

551
00:29:32,920 --> 00:29:35,960
Speaker 1: and the rest of it that animals like Federated or

552
00:29:36,000 --> 00:29:39,640
Speaker 1: mes are dealing with. Is all this market about is

553
00:29:39,680 --> 00:29:43,200
Speaker 1: just a ginormous first order condition, which is a wall

554
00:29:43,240 --> 00:29:45,280
Speaker 1: of money trying to find a warm spot.

555
00:29:46,560 --> 00:29:48,680
Speaker 9: Well, it's very much a huge piece of it. And

556
00:29:48,920 --> 00:29:50,720
Speaker 9: that wall of money is not just looking for a

557
00:29:50,760 --> 00:29:53,760
Speaker 9: place to invest. That wall of money is out there

558
00:29:54,200 --> 00:29:56,760
Speaker 9: spending and particularly on services. And it will be interesting

559
00:29:56,760 --> 00:30:00,240
Speaker 9: to see what the PMI say. But whatever information we've

560
00:30:00,240 --> 00:30:04,680
Speaker 9: got to buy, confidence, not just consumer confidence, but housing

561
00:30:04,720 --> 00:30:09,000
Speaker 9: confidence has been very very strong here lately. Airline information

562
00:30:09,080 --> 00:30:09,880
Speaker 9: that I just saw.

563
00:30:09,720 --> 00:30:11,720
Speaker 4: This just I think the other two days ago.

564
00:30:12,000 --> 00:30:15,800
Speaker 9: Airline information is very strong for this summer. So the

565
00:30:15,840 --> 00:30:16,840
Speaker 9: recessions too early.

566
00:30:17,440 --> 00:30:19,280
Speaker 1: Yeah, I don't want lind, I don't want you to

567
00:30:19,280 --> 00:30:22,520
Speaker 1: talk about a specific portfolio. But if I'm looking at

568
00:30:22,520 --> 00:30:25,960
Speaker 1: a federated portfolio and we're in the old days, you

569
00:30:25,960 --> 00:30:28,920
Speaker 1: had two or three or four percent in Microsoft or Apple,

570
00:30:30,080 --> 00:30:32,920
Speaker 1: let's say on a perspective s basis, it's elevated up

571
00:30:33,640 --> 00:30:37,280
Speaker 1: by growth to eight percent or ten percent. Are you

572
00:30:37,320 --> 00:30:41,760
Speaker 1: guys forced to sell these big tech companies when they

573
00:30:41,800 --> 00:30:43,719
Speaker 1: become so big? How do you handle that?

574
00:30:44,920 --> 00:30:45,120
Speaker 10: Well?

575
00:30:45,120 --> 00:30:48,720
Speaker 9: Of course, we have portfolios that are stock bond portfolios

576
00:30:48,720 --> 00:30:51,880
Speaker 9: that are all across the spectrum, and we have our objectives.

577
00:30:52,440 --> 00:30:56,200
Speaker 9: There is no particular requirement, but each portfolio manager will

578
00:30:56,200 --> 00:30:59,120
Speaker 9: have an objective that says, once a particular holding gets

579
00:30:59,120 --> 00:31:03,720
Speaker 9: above a particular level, maybe five percent or so, then

580
00:31:03,760 --> 00:31:05,800
Speaker 9: they'll they may want to trim some of that because

581
00:31:05,840 --> 00:31:07,959
Speaker 9: it gets to be outsized. Of course, this is one

582
00:31:08,000 --> 00:31:10,880
Speaker 9: of the reasons why portfolio manage managers have had a

583
00:31:10,960 --> 00:31:13,720
Speaker 9: very difficult time beating the SMP this year, as you

584
00:31:13,800 --> 00:31:15,960
Speaker 9: can't hold as much in the SMP as the S

585
00:31:16,000 --> 00:31:17,320
Speaker 9: ANDP bolts in these big names.

586
00:31:17,680 --> 00:31:19,920
Speaker 1: Linda, thank you, Linda Dussel, whether it's the Federated or

587
00:31:20,040 --> 00:31:28,120
Speaker 1: me as there one time, ten, twelve, thirteen years ago,

588
00:31:28,160 --> 00:31:31,320
Speaker 1: I really can't remember. I guess I had nothing to do.

589
00:31:31,400 --> 00:31:33,200
Speaker 1: I follow how'd go over and get a free glass

590
00:31:33,200 --> 00:31:36,000
Speaker 1: of wine from Richard hass at the Console on Foreign Relations.

591
00:31:36,440 --> 00:31:39,360
Speaker 1: I walked up Park Avenue, I went into their wonderful building,

592
00:31:40,160 --> 00:31:43,880
Speaker 1: and Ambassador Haas walked out and he did something was like, well, okay,

593
00:31:43,960 --> 00:31:48,800
Speaker 1: so what he interviewed? He introduced rather a new website

594
00:31:49,280 --> 00:31:52,760
Speaker 1: for the Console on Foreign Relations. He and his team

595
00:31:52,840 --> 00:31:55,440
Speaker 1: were at least five, if not eight years ahead of

596
00:31:55,560 --> 00:31:59,680
Speaker 1: everybody else in the digital media game. And I can't

597
00:31:59,720 --> 00:32:03,400
Speaker 1: say enough about the value of the Council on Foreign

598
00:32:03,480 --> 00:32:08,959
Speaker 1: Relations website right now. Roger Ferguson on a reset of

599
00:32:09,000 --> 00:32:12,200
Speaker 1: where the Fed should head to on interest rates, and

600
00:32:12,280 --> 00:32:16,000
Speaker 1: an introduction here of Ambassador has Alyssa Airs of Georgetown

601
00:32:16,640 --> 00:32:20,200
Speaker 1: on what we don't know about India. Richard hasse wonderful

602
00:32:20,200 --> 00:32:24,840
Speaker 1: to have you on today. Professor Ayers of Georgetown is

603
00:32:25,080 --> 00:32:31,160
Speaker 1: blistering about how India wants to deal with the United States.

604
00:32:31,520 --> 00:32:34,600
Speaker 1: We saw Modi at the White House. Was it a fiction?

605
00:32:36,560 --> 00:32:39,280
Speaker 11: It wasn't a fiction, Tom, but his enormous height in

606
00:32:39,360 --> 00:32:41,880
Speaker 11: terms of what India is going to do for and

607
00:32:41,920 --> 00:32:45,040
Speaker 11: with the United States, let me think about it. Yes,

608
00:32:45,400 --> 00:32:48,760
Speaker 11: it's fast growing economy, it's the most populous country in

609
00:32:48,800 --> 00:32:52,240
Speaker 11: the world, but there are some important butts when it

610
00:32:52,280 --> 00:32:54,120
Speaker 11: comes to India.

611
00:32:54,160 --> 00:32:57,040
Speaker 12: It still gets most of its arms from Russia.

612
00:32:57,520 --> 00:33:01,000
Speaker 11: It's buying copious amounts of Russian oil and gas.

613
00:33:01,040 --> 00:33:03,120
Speaker 12: It hasn't supported US diplomatically there.

614
00:33:03,360 --> 00:33:06,440
Speaker 11: It's a reminder that India always hedges it in its

615
00:33:06,440 --> 00:33:07,280
Speaker 11: farm policy.

616
00:33:07,600 --> 00:33:10,000
Speaker 12: And yes, there's growth in our economic relations.

617
00:33:10,000 --> 00:33:12,280
Speaker 11: But as everyone who would come on your show would

618
00:33:12,320 --> 00:33:16,040
Speaker 11: tell you, we does business there, it's still extraordinarily tough

619
00:33:16,080 --> 00:33:18,800
Speaker 11: to gain access to the to the Indian marketing.

620
00:33:19,120 --> 00:33:21,440
Speaker 12: So kind of a lot of happy talk about the

621
00:33:21,560 --> 00:33:22,320
Speaker 12: United States in.

622
00:33:22,360 --> 00:33:26,600
Speaker 1: India is it just too far away, is it, you know,

623
00:33:27,120 --> 00:33:30,560
Speaker 1: like a Patrick O'Brien novel on the other side of

624
00:33:30,600 --> 00:33:31,080
Speaker 1: the world.

625
00:33:33,840 --> 00:33:35,240
Speaker 12: Look, we know, I.

626
00:33:35,200 --> 00:33:37,520
Speaker 11: Don't think that's the U ship and I think again.

627
00:33:37,640 --> 00:33:40,480
Speaker 11: But it's also driving in years domestic politics. It turns

628
00:33:40,480 --> 00:33:44,440
Speaker 11: out the Indian American community time it's the wealthiest community

629
00:33:44,480 --> 00:33:47,600
Speaker 11: of any other community in the United States. There's obviously

630
00:33:47,640 --> 00:33:49,080
Speaker 11: powerful political reasons.

631
00:33:49,280 --> 00:33:51,120
Speaker 12: No, it's just it's just difficult.

632
00:33:51,280 --> 00:33:54,200
Speaker 11: We don't have a great tradition of cooperating with India,

633
00:33:54,320 --> 00:33:56,760
Speaker 11: and people I think are hyping it, Which is not

634
00:33:56,880 --> 00:33:57,840
Speaker 11: to say there's not something.

635
00:33:57,880 --> 00:33:59,320
Speaker 12: There's not something there. There is.

636
00:33:59,320 --> 00:34:03,720
Speaker 11: There is growing strategic cooperation, growing economic trade and investment.

637
00:34:03,960 --> 00:34:06,320
Speaker 12: I just think people are exaggerating the upside.

638
00:34:06,520 --> 00:34:09,280
Speaker 3: In the meantime, during the conversation and the President Biden

639
00:34:09,360 --> 00:34:12,279
Speaker 3: had with Prime Minister Modi, he poo pooed some of

640
00:34:12,320 --> 00:34:16,400
Speaker 3: the controversy around calling Jijinping a dictator, saying it's not

641
00:34:16,440 --> 00:34:18,920
Speaker 3: a big deal. You know he is, and I'm going

642
00:34:18,960 --> 00:34:20,879
Speaker 3: to head over there and meet him. Do you think

643
00:34:20,920 --> 00:34:23,520
Speaker 3: that that was enough to quell some of the concerns

644
00:34:23,520 --> 00:34:25,520
Speaker 3: about the renewed tensions that he ignited.

645
00:34:27,320 --> 00:34:29,600
Speaker 11: It wasn't helpful first of all, saying that Shishaping didn't

646
00:34:29,600 --> 00:34:31,879
Speaker 11: know about the Bologon incident. The president may have thought

647
00:34:31,920 --> 00:34:34,080
Speaker 11: he was helping him, but if you're the guy who

648
00:34:34,120 --> 00:34:34,879
Speaker 11: was really.

649
00:34:34,640 --> 00:34:37,319
Speaker 12: In charge of China, you don't like being reminded that

650
00:34:37,400 --> 00:34:39,719
Speaker 12: you may not be one hundred percent in charge. The

651
00:34:39,800 --> 00:34:41,319
Speaker 12: dictator comment didn't help.

652
00:34:41,560 --> 00:34:43,280
Speaker 11: But I think at the end of the day, China

653
00:34:43,360 --> 00:34:46,319
Speaker 11: is worried most not about what Joe Biden said. He's

654
00:34:46,320 --> 00:34:50,640
Speaker 11: worried about new economic restrictions, export controls, and so forth.

655
00:34:50,880 --> 00:34:52,480
Speaker 11: So what they want to do is try to put

656
00:34:52,520 --> 00:34:55,560
Speaker 11: a limit on well what's introduced in that realm, and

657
00:34:55,640 --> 00:34:59,240
Speaker 11: come November, President Xieshin Pining wants to meet with President

658
00:34:59,280 --> 00:34:59,960
Speaker 11: Biden here.

659
00:35:00,239 --> 00:35:03,279
Speaker 12: So my guess is they're going to overlook this latest.

660
00:35:03,080 --> 00:35:07,240
Speaker 3: Diplomaticans given that heading into this year, you are among

661
00:35:07,280 --> 00:35:09,560
Speaker 3: the people saying it's one of the most fraught times

662
00:35:09,600 --> 00:35:12,759
Speaker 3: we have ever seen on a geopolitical stance. Do you

663
00:35:12,800 --> 00:35:16,200
Speaker 3: think that those tensions have abated, that we've moved away

664
00:35:16,239 --> 00:35:19,040
Speaker 3: from the brink and it feels less perilous now, or

665
00:35:19,040 --> 00:35:21,359
Speaker 3: do you think people are just taking a pause and

666
00:35:21,400 --> 00:35:24,080
Speaker 3: focusing on things like the FED, like the Bank of England,

667
00:35:24,520 --> 00:35:26,840
Speaker 3: and we'll be reminded of the geopolitical pressures later on.

668
00:35:27,920 --> 00:35:29,520
Speaker 11: Yeah, at the risk of not giving you the answer

669
00:35:29,600 --> 00:35:33,960
Speaker 11: you want, the tensions haven't gotten any less possibilities. You

670
00:35:34,000 --> 00:35:37,000
Speaker 11: know what happens next with Russia in Europe and Ukraine.

671
00:35:37,080 --> 00:35:40,360
Speaker 11: None of that's gone away, the dangers of continued war escalation.

672
00:35:41,040 --> 00:35:44,640
Speaker 11: The United States Chinese relationship is still searching for a floor.

673
00:35:45,040 --> 00:35:47,160
Speaker 11: We're tired of the Middle East, but the Middle East

674
00:35:47,239 --> 00:35:48,200
Speaker 11: isn't tired of us.

675
00:35:48,480 --> 00:35:51,000
Speaker 12: You've got a rond still on the brink of nuclear weapons.

676
00:35:51,000 --> 00:35:53,239
Speaker 11: I'm actually even more worried in the short run that

677
00:35:53,360 --> 00:35:57,399
Speaker 11: the Israeli Palestinian relationship could blow sky high. I think

678
00:35:57,440 --> 00:36:00,239
Speaker 11: it is very close to the edge of extraor their

679
00:36:00,800 --> 00:36:05,760
Speaker 11: eruptions of violence there. We're doing nothing on client really

680
00:36:05,840 --> 00:36:07,000
Speaker 11: to speak up.

681
00:36:07,200 --> 00:36:08,960
Speaker 12: So when I take a step back, I go no.

682
00:36:09,440 --> 00:36:12,600
Speaker 11: I see no evidence that the world is becoming a

683
00:36:12,680 --> 00:36:15,120
Speaker 11: more safe place in this era of what.

684
00:36:15,040 --> 00:36:17,080
Speaker 12: You might call geopolitical revival.

685
00:36:17,719 --> 00:36:22,200
Speaker 1: Richard has summer reading at Congress in the House of Representatives,

686
00:36:22,320 --> 00:36:25,480
Speaker 1: in a fractious Senate is everybody has to read your

687
00:36:25,560 --> 00:36:30,200
Speaker 1: Bill of obligations. It's a superb short effort folks, this

688
00:36:30,280 --> 00:36:33,960
Speaker 1: is the book to throw at the offspring this summer

689
00:36:34,280 --> 00:36:37,719
Speaker 1: when they're mouthing off all their political verbiage, either right

690
00:36:38,160 --> 00:36:40,719
Speaker 1: or left, just say shut up and read it has

691
00:36:40,760 --> 00:36:45,239
Speaker 1: the Bill of Obligations. How are we doing on Capitol Hill, Ambassador?

692
00:36:45,320 --> 00:36:47,400
Speaker 1: Has is anybody reading your book?

693
00:36:48,360 --> 00:36:48,520
Speaker 11: Well?

694
00:36:48,560 --> 00:36:51,359
Speaker 13: First of all, Tom, I say, that's truly the most

695
00:36:51,360 --> 00:36:52,040
Speaker 13: interesting book.

696
00:36:52,160 --> 00:36:56,160
Speaker 12: Drsement I've ever seen in my life. I want to

697
00:36:56,160 --> 00:36:58,480
Speaker 12: put that on the cover of something.

698
00:36:58,719 --> 00:37:00,880
Speaker 11: Look, I think a lot of peopleeople in Congress and

699
00:37:00,920 --> 00:37:04,640
Speaker 11: beyond know there's something wrong here, that American democracy is

700
00:37:04,719 --> 00:37:07,840
Speaker 11: off the rails. There's obviously not a consensus someone to

701
00:37:07,880 --> 00:37:08,520
Speaker 11: do about it.

702
00:37:08,560 --> 00:37:10,360
Speaker 12: But as I go around the country.

703
00:37:10,280 --> 00:37:14,160
Speaker 11: Talking about the Bill of Obligations, people know it. It

704
00:37:14,239 --> 00:37:18,759
Speaker 11: resonates more interested in putting civics in our schools, much

705
00:37:18,800 --> 00:37:22,719
Speaker 11: more interested in reviving public service since that again we

706
00:37:22,840 --> 00:37:24,200
Speaker 11: somehow lost our way in.

707
00:37:24,160 --> 00:37:28,040
Speaker 12: As a price that we could well pay. So I'm

708
00:37:28,080 --> 00:37:29,480
Speaker 12: actually somewhat encouraged.

709
00:37:29,719 --> 00:37:32,360
Speaker 11: Again, We're not there to consent what to do, but

710
00:37:32,440 --> 00:37:34,799
Speaker 11: I think this greater acceptance that we really do have

711
00:37:35,280 --> 00:37:38,000
Speaker 11: a serious problem on our hands, and it's a problem

712
00:37:38,040 --> 00:37:40,320
Speaker 11: that transcends any single individual.

713
00:37:40,400 --> 00:37:42,640
Speaker 1: Enough politics or shureus. Thank you so much for the

714
00:37:42,680 --> 00:37:57,600
Speaker 1: concept foreign relations. One time, ten, twelve, thirteen years ago,

715
00:37:57,640 --> 00:38:00,960
Speaker 1: I really can't remember. I had nothing to do. I

716
00:38:01,000 --> 00:38:02,680
Speaker 1: follow how to go over and get a free glass

717
00:38:02,680 --> 00:38:05,440
Speaker 1: of wine from Richard Hass at the Consul on Foreign Relations.

718
00:38:05,920 --> 00:38:08,840
Speaker 1: I walked up Park Avenue, I went into their wonderful building,

719
00:38:09,640 --> 00:38:13,360
Speaker 1: and Ambassador House walked out and he did something was like, well, okay,

720
00:38:13,440 --> 00:38:18,280
Speaker 1: so what he interviewed? He introduced rather a new website

721
00:38:18,760 --> 00:38:22,240
Speaker 1: for the Council on Foreign Relations. He and his team

722
00:38:22,320 --> 00:38:24,920
Speaker 1: were at least five, if not eight, years ahead of

723
00:38:25,040 --> 00:38:29,160
Speaker 1: everybody else in the digital media game. And I can't

724
00:38:29,239 --> 00:38:32,920
Speaker 1: say enough about the value of the Console on Foreign

725
00:38:32,960 --> 00:38:38,440
Speaker 1: Relations website Right now. Roger Ferguson on a reset of

726
00:38:38,480 --> 00:38:41,680
Speaker 1: where the FED should head to on interest rates and

727
00:38:41,760 --> 00:38:45,480
Speaker 1: an introduction here of Ambassador hasse Alissa Ayers of Georgetown

728
00:38:46,080 --> 00:38:49,680
Speaker 1: on what we don't know about India. Richard Hass wonderful

729
00:38:49,680 --> 00:38:54,279
Speaker 1: to have you on today. Professor Ayers of Georgetown is

730
00:38:54,560 --> 00:39:00,520
Speaker 1: blistering about how India wants to deal with the United Dates.

731
00:39:01,000 --> 00:39:04,080
Speaker 1: We saw Mody at the White House. Was it a fiction?

732
00:39:06,040 --> 00:39:08,759
Speaker 11: It wasn't a fiction, Tom, But this enormous height in

733
00:39:08,840 --> 00:39:11,319
Speaker 11: terms of what India is going to do for and

734
00:39:11,400 --> 00:39:12,640
Speaker 11: with the United States.

735
00:39:13,000 --> 00:39:14,000
Speaker 12: I mean, think about it.

736
00:39:14,320 --> 00:39:18,120
Speaker 11: Yes, it's fast growing economy, it's the most populous country

737
00:39:18,160 --> 00:39:21,600
Speaker 11: in the world. But there are some important butts when

738
00:39:21,640 --> 00:39:23,560
Speaker 11: it comes to India.

739
00:39:23,640 --> 00:39:26,520
Speaker 12: It still gets most of its arms from Russia.

740
00:39:27,000 --> 00:39:30,480
Speaker 11: It's buying copious amounts of Russian oil and gas.

741
00:39:30,520 --> 00:39:32,600
Speaker 12: It hasn't supported US diplomatically there.

742
00:39:32,840 --> 00:39:36,759
Speaker 11: It's a reminder that India always hedges in its farm policy.

743
00:39:37,080 --> 00:39:39,719
Speaker 11: And yes, there's growth in our economic relations. But is

744
00:39:39,760 --> 00:39:41,440
Speaker 11: everyone who would come on your.

745
00:39:41,280 --> 00:39:43,480
Speaker 12: Show would tell you he does business there.

746
00:39:43,719 --> 00:39:48,280
Speaker 11: It's still extraordinarily tough to gain access to the Indian marketing.

747
00:39:48,560 --> 00:39:50,880
Speaker 11: So kind of a lot of happy talk about the

748
00:39:51,000 --> 00:39:52,440
Speaker 11: United States in India.

749
00:39:52,560 --> 00:39:55,160
Speaker 1: Is it just too far away?

750
00:39:55,600 --> 00:39:55,799
Speaker 14: Is it?

751
00:39:55,920 --> 00:39:59,479
Speaker 1: You know, like a Patrick O'Brien novel on the other

752
00:39:59,600 --> 00:40:00,560
Speaker 1: side of the world.

753
00:40:03,320 --> 00:40:06,440
Speaker 11: Look, we know, I don't think that's the yuship, and

754
00:40:06,480 --> 00:40:09,440
Speaker 11: I think again. But it's also driving in years domestic politics.

755
00:40:09,560 --> 00:40:12,719
Speaker 11: It turns out the Indian American community time it's the

756
00:40:12,760 --> 00:40:16,120
Speaker 11: wealthiest community of any other community in the United States.

757
00:40:16,280 --> 00:40:19,719
Speaker 12: But there's obviously powerful political reasons. No, it's just it's

758
00:40:19,800 --> 00:40:20,600
Speaker 12: just difficult.

759
00:40:20,760 --> 00:40:23,680
Speaker 11: We don't have a great tradition of cooperating with India,

760
00:40:23,800 --> 00:40:26,239
Speaker 11: and people I think are hyping it, Which is not

761
00:40:26,320 --> 00:40:28,319
Speaker 11: to say there's not something there.

762
00:40:28,400 --> 00:40:28,799
Speaker 12: There is.

763
00:40:28,800 --> 00:40:33,160
Speaker 11: There is growing strategic cooperation, growing economic trade and investment.

764
00:40:33,400 --> 00:40:35,799
Speaker 12: I just think people are exaggerating the upside.

765
00:40:36,000 --> 00:40:38,760
Speaker 3: In the meantime, during the conversation and the President Biden

766
00:40:38,840 --> 00:40:41,759
Speaker 3: had with Prime Minister Modi, he poo pooed some of

767
00:40:41,800 --> 00:40:45,880
Speaker 3: the controversy around calling Jijinping a dictator, saying it's not

768
00:40:45,920 --> 00:40:48,360
Speaker 3: a big deal. You know he is, and I'm going

769
00:40:48,440 --> 00:40:50,359
Speaker 3: to head over there and meet him. Do you think

770
00:40:50,360 --> 00:40:53,000
Speaker 3: that that was enough to quell some of the concerns

771
00:40:53,000 --> 00:40:55,000
Speaker 3: about the renewed tensions that he ignited.

772
00:40:56,600 --> 00:40:57,520
Speaker 12: What it wasn't helpful?

773
00:40:57,520 --> 00:40:59,439
Speaker 11: First of all, saying that Shisha Pig didn't know about

774
00:40:59,440 --> 00:41:01,600
Speaker 11: the Bologna to the President may have thought he was

775
00:41:01,640 --> 00:41:04,359
Speaker 11: helping him, but if you're the guy who was really.

776
00:41:04,120 --> 00:41:06,799
Speaker 12: In charge of China, you don't like being reminded that

777
00:41:06,840 --> 00:41:08,960
Speaker 12: you may not be one hundred percent in charge.

778
00:41:09,120 --> 00:41:11,640
Speaker 15: The dictator comment didn't help, But I think at the

779
00:41:11,719 --> 00:41:14,200
Speaker 15: end of the day, China is worried most not about

780
00:41:14,200 --> 00:41:18,000
Speaker 15: what Joe Biden said he's worried about new economic restrictions,

781
00:41:18,280 --> 00:41:20,120
Speaker 15: export controls and so forth.

782
00:41:20,360 --> 00:41:22,000
Speaker 11: So what they want to do is try to put

783
00:41:22,000 --> 00:41:26,040
Speaker 11: a limit on what's introduced in that realm, and come November,

784
00:41:26,280 --> 00:41:29,399
Speaker 11: President Shieshan thing wants to meet with President Biden here.

785
00:41:29,719 --> 00:41:32,759
Speaker 12: So my guess is they're going to overlook this latest.

786
00:41:32,520 --> 00:41:36,720
Speaker 3: Diplomaticus given that heading into this year, you were among

787
00:41:36,760 --> 00:41:39,040
Speaker 3: the people saying it's one of the most fraught times

788
00:41:39,080 --> 00:41:42,239
Speaker 3: we have ever seen on a geopolitical stance. Do you

789
00:41:42,280 --> 00:41:45,680
Speaker 3: think that those tensions have abated, that we've moved away

790
00:41:45,719 --> 00:41:48,520
Speaker 3: from the brink and it feels less perilous now, or

791
00:41:48,520 --> 00:41:50,839
Speaker 3: do you think people are just taking a pause and

792
00:41:50,880 --> 00:41:53,120
Speaker 3: focusing on things like the FED, like the Bank of

793
00:41:53,160 --> 00:41:56,400
Speaker 3: England and we'll be reminded of the geopolitical pressures later on.

794
00:41:57,360 --> 00:41:59,040
Speaker 11: Yeah, at the risk of not giving you the answer

795
00:41:59,080 --> 00:42:03,440
Speaker 11: you want, the tensions haven't gotten any less possibilities. You

796
00:42:03,480 --> 00:42:06,440
Speaker 11: know what happens next with Russia in Europe and Ukraine.

797
00:42:06,560 --> 00:42:09,840
Speaker 11: None of that's gone away, the dangers of continued war escalation,

798
00:42:10,520 --> 00:42:14,120
Speaker 11: the United States Chinese relationship, it's still searching for a floor.

799
00:42:14,520 --> 00:42:16,640
Speaker 12: We're tired of the middle East. But the Middle East

800
00:42:16,719 --> 00:42:19,200
Speaker 12: isn't tired of us. You've got a rond still on

801
00:42:19,239 --> 00:42:20,480
Speaker 12: the brink of nuclear weapons.

802
00:42:20,480 --> 00:42:22,719
Speaker 11: I'm actually even more worried in the short run that

803
00:42:22,840 --> 00:42:26,879
Speaker 11: the Israeli Palestinian relationship could blow sky high. I think

804
00:42:26,920 --> 00:42:30,840
Speaker 11: it is very close to the edge of extraordinary eruptions

805
00:42:31,520 --> 00:42:32,520
Speaker 11: of violence there.

806
00:42:32,840 --> 00:42:36,480
Speaker 12: We're doing nothing on climate really to speak up.

807
00:42:36,680 --> 00:42:38,440
Speaker 11: So when I take a step back, I go no,

808
00:42:38,920 --> 00:42:42,080
Speaker 11: I see no evidence that the world is becoming a

809
00:42:42,160 --> 00:42:44,879
Speaker 11: more stake place in this era of what you might

810
00:42:44,880 --> 00:42:46,520
Speaker 11: call geopolitical revival.

811
00:42:47,200 --> 00:42:51,680
Speaker 1: Richard has summer reading at Congress in the House of Representatives,

812
00:42:51,800 --> 00:42:54,960
Speaker 1: in a fractious Senate as everybody has to read your

813
00:42:55,040 --> 00:42:59,640
Speaker 1: Bill of Obligations. It's a superb short effort, folks. This

814
00:42:59,719 --> 00:43:03,480
Speaker 1: is the book to throw at the offspring this summer

815
00:43:03,760 --> 00:43:07,200
Speaker 1: when they're mouthing off all their political verbiage, either right

816
00:43:07,640 --> 00:43:10,200
Speaker 1: or left, just say shut up and read it has

817
00:43:10,239 --> 00:43:14,120
Speaker 1: the Bill of Obligations. How are we doing on Capitol Hill,

818
00:43:14,160 --> 00:43:16,800
Speaker 1: Ambassador Oz, is anybody reading your book?

819
00:43:17,840 --> 00:43:19,520
Speaker 13: Well, first of all, Tom, let me say that's the

820
00:43:19,880 --> 00:43:22,959
Speaker 13: That's truly the most interesting book endorsement I've ever seen

821
00:43:24,160 --> 00:43:24,759
Speaker 13: in my life.

822
00:43:24,800 --> 00:43:27,960
Speaker 12: I'm want to put that on the cover of something.

823
00:43:28,160 --> 00:43:30,360
Speaker 11: Look, I think a lot of people in Congress and

824
00:43:30,400 --> 00:43:34,120
Speaker 11: beyond know there's something wrong here, that American democracy is

825
00:43:34,200 --> 00:43:37,279
Speaker 11: off the rails. There's obviously not a consensus somewhat to

826
00:43:37,360 --> 00:43:39,480
Speaker 11: do about it. But as I go around the country

827
00:43:39,760 --> 00:43:43,640
Speaker 11: talking about the Bill of Obligations, people know it. It

828
00:43:43,719 --> 00:43:48,239
Speaker 11: resonates more interest in putting civics in our schools, much

829
00:43:48,280 --> 00:43:52,200
Speaker 11: more interested in reviving public service. Since then again we

830
00:43:52,320 --> 00:43:55,440
Speaker 11: somehow lost our way in as a price that we

831
00:43:55,480 --> 00:43:56,800
Speaker 11: could we could well pay.

832
00:43:56,960 --> 00:43:58,960
Speaker 12: So I'm actually somewhat encouraged.

833
00:43:59,200 --> 00:44:01,439
Speaker 11: Again, We're not there that can send what to do,

834
00:44:01,760 --> 00:44:04,040
Speaker 11: but I think this greater acceptance that we really do

835
00:44:04,160 --> 00:44:07,040
Speaker 11: have a serious problem on our hands, and it's a

836
00:44:07,080 --> 00:44:09,880
Speaker 11: problem that transcends any single individual and.

837
00:44:09,920 --> 00:44:12,520
Speaker 1: A politics Shureaus, thank you so much for the consult

838
00:44:12,560 --> 00:44:19,400
Speaker 1: foreign relations. We're going to take a different track tacked

839
00:44:19,480 --> 00:44:23,080
Speaker 1: right now. And for those of you renting, for those

840
00:44:23,080 --> 00:44:26,719
Speaker 1: of you looking at investment where you're scared stiff of

841
00:44:26,800 --> 00:44:29,920
Speaker 1: the six months to come. Someone expert on this is

842
00:44:30,000 --> 00:44:34,080
Speaker 1: Brad Dillman. He's chief economist of Cortland in Atlanta. They

843
00:44:34,160 --> 00:44:37,600
Speaker 1: do all sorts of sun Belt multifamily stuff, but far

844
00:44:37,719 --> 00:44:41,120
Speaker 1: far mortally importantly, this is a guy out of Washington

845
00:44:41,160 --> 00:44:47,040
Speaker 1: and LSE in the economics of geography, in spatial economics.

846
00:44:47,040 --> 00:44:50,520
Speaker 1: This is a cottage industry of the London School of Economics,

847
00:44:50,520 --> 00:44:54,400
Speaker 1: and Dilman is one of their esteemed graduates. How bad

848
00:44:54,680 --> 00:45:00,239
Speaker 1: is the geography of our multifamily investment right now? We

849
00:45:00,360 --> 00:45:03,759
Speaker 1: use the inflammatory phrase this is Gidtleson's fault. We use

850
00:45:03,800 --> 00:45:07,000
Speaker 1: the phrase time bomb? Is your world? Brad Dillman a

851
00:45:07,120 --> 00:45:07,760
Speaker 1: time bomb?

852
00:45:09,040 --> 00:45:11,279
Speaker 16: I wouldn't call it a time bomb, no, And to

853
00:45:11,320 --> 00:45:13,040
Speaker 16: the degree that it might be, it's a very slow

854
00:45:13,040 --> 00:45:13,680
Speaker 16: moving one.

855
00:45:14,040 --> 00:45:15,640
Speaker 4: There's a number of factors at play here.

856
00:45:16,040 --> 00:45:18,120
Speaker 16: I've interpreted a lot of the policies coming out of

857
00:45:18,200 --> 00:45:21,880
Speaker 16: the pandemic as being a de facto housing supply stimulus,

858
00:45:21,920 --> 00:45:23,480
Speaker 16: not just on the single family side. But we had

859
00:45:23,520 --> 00:45:25,880
Speaker 16: low interest rates leading the home price appreciation and single

860
00:45:25,880 --> 00:45:29,720
Speaker 16: family supply, but the eviction moratoria distorting occupancy rates markets,

861
00:45:30,239 --> 00:45:32,439
Speaker 16: increasing rent growth, and then in the context of zero

862
00:45:32,480 --> 00:45:35,919
Speaker 16: industrates allowing a lot of multifamily supply to kick off

863
00:45:36,400 --> 00:45:38,680
Speaker 16: in a country that's been under built for quite some time.

864
00:45:39,000 --> 00:45:41,160
Speaker 4: That's not really an issue, but could it compound into

865
00:45:41,160 --> 00:45:41,760
Speaker 4: one eventually.

866
00:45:41,840 --> 00:45:45,359
Speaker 1: Yes, right, I'm fascinated what you see and don't kid

867
00:45:45,400 --> 00:45:48,160
Speaker 1: your sales guys. Cortland is looking at this like on

868
00:45:48,200 --> 00:45:53,760
Speaker 1: a five minute basis, Are you actually seeing rents level

869
00:45:53,920 --> 00:45:58,960
Speaker 1: out or rent disinflation? Could that be possible? Asking for

870
00:45:59,040 --> 00:46:02,160
Speaker 1: twenty million people in tri state New York. They don't

871
00:46:02,200 --> 00:46:02,680
Speaker 1: believe it.

872
00:46:03,320 --> 00:46:05,319
Speaker 16: Yeah, No, the data is very clear that we've been

873
00:46:05,320 --> 00:46:08,280
Speaker 16: in a disinflationary rent growth environment. So annual rent growth

874
00:46:08,280 --> 00:46:10,520
Speaker 16: peak in general terms, you know, in the summer of

875
00:46:10,600 --> 00:46:13,120
Speaker 16: last year. It's been slowing since then. One thing we

876
00:46:13,200 --> 00:46:15,800
Speaker 16: have seen has been that new leases, so we're always

877
00:46:15,800 --> 00:46:18,800
Speaker 16: looking at you know, new leases and then also existing

878
00:46:18,880 --> 00:46:22,040
Speaker 16: leases that are going to renew right new leases or

879
00:46:22,120 --> 00:46:25,440
Speaker 16: a vacant unit have started to increase again just at

880
00:46:25,440 --> 00:46:28,000
Speaker 16: the same time that looks like occupancies may start to trough.

881
00:46:28,120 --> 00:46:30,239
Speaker 16: So what has been called like a six to eight

882
00:46:30,280 --> 00:46:33,560
Speaker 16: month disinflationary environment in rent growth looks like it could

883
00:46:33,560 --> 00:46:34,879
Speaker 16: actually start to re expand again.

884
00:46:35,840 --> 00:46:38,680
Speaker 1: Help me with a not in my backyard. I mean,

885
00:46:38,880 --> 00:46:43,239
Speaker 1: what's a typical multifamily size? How many units is a

886
00:46:43,280 --> 00:46:45,480
Speaker 1: typical Courtland property.

887
00:46:46,080 --> 00:46:48,000
Speaker 4: About two hundred and fifty two hundred and fifty to

888
00:46:48,040 --> 00:46:48,960
Speaker 4: three hundred units.

889
00:46:49,000 --> 00:46:51,239
Speaker 16: These is you know, for Courtland, it's suburban mid rise

890
00:46:51,320 --> 00:46:53,040
Speaker 16: product generally in the sun Belt.

891
00:46:53,040 --> 00:46:55,080
Speaker 4: But obviously there's all sorts of different types of housing

892
00:46:55,080 --> 00:46:55,439
Speaker 4: out there.

893
00:46:55,520 --> 00:46:57,920
Speaker 1: What's the not in my backyard level right now? Is

894
00:46:57,920 --> 00:46:59,640
Speaker 1: it tough to build this stuff like it is up

895
00:46:59,640 --> 00:47:00,440
Speaker 1: in the North Feast?

896
00:47:01,480 --> 00:47:01,640
Speaker 11: You know?

897
00:47:01,719 --> 00:47:03,920
Speaker 16: The reality is that the suburbs have never been more

898
00:47:03,960 --> 00:47:06,239
Speaker 16: accommodated when it comes to multi family housing. It's a

899
00:47:06,320 --> 00:47:08,200
Speaker 16: it's a narrative that we hear a lot. If you

900
00:47:08,239 --> 00:47:10,560
Speaker 16: look at the construction as a percentage of inventory in

901
00:47:10,600 --> 00:47:12,719
Speaker 16: the suburbs, it's really caught up to the Earthport.

902
00:47:14,080 --> 00:47:17,280
Speaker 1: I see. Got you. The problem here, folks, is Brad

903
00:47:17,320 --> 00:47:20,360
Speaker 1: answers short questions. He thinks he's on TV. You're on

904
00:47:20,480 --> 00:47:24,120
Speaker 1: radio tube, Brad worldwide. So you're allowed to expand on that.

905
00:47:24,200 --> 00:47:27,959
Speaker 1: I want you to expand right now on your optimism

906
00:47:28,040 --> 00:47:31,839
Speaker 1: on multifamily housing over the next two years, because all

907
00:47:31,880 --> 00:47:34,120
Speaker 1: we get up here in New York, all we get

908
00:47:34,200 --> 00:47:36,719
Speaker 1: is gloom on real estate. I'm not hearing that love

909
00:47:36,760 --> 00:47:40,120
Speaker 1: from you. Are you optimistic about multifamily development?

910
00:47:42,040 --> 00:47:43,400
Speaker 4: Am I optimist about development?

911
00:47:43,440 --> 00:47:43,480
Speaker 9: No?

912
00:47:43,680 --> 00:47:43,960
Speaker 2: I'm not.

913
00:47:44,360 --> 00:47:46,480
Speaker 4: And the reason for that is the interest rate environment.

914
00:47:46,520 --> 00:47:49,200
Speaker 16: If we look at the cost to get a construction

915
00:47:49,320 --> 00:47:51,480
Speaker 16: loan for the larger kind of product that say Courtland

916
00:47:51,480 --> 00:47:53,360
Speaker 16: would develop, this's two hundred and fifty to three hundred

917
00:47:53,440 --> 00:47:56,080
Speaker 16: unit product. It's too stiff right now as far as

918
00:47:56,120 --> 00:47:58,239
Speaker 16: we can tell, that area of the multi failing market

919
00:47:58,239 --> 00:48:00,400
Speaker 16: has shut down. But if you look at multi family

920
00:48:00,440 --> 00:48:03,040
Speaker 16: starts in the five unit in upspace, right, so this

921
00:48:03,160 --> 00:48:05,479
Speaker 16: is going to be smaller product, maybe ten units, maybe

922
00:48:05,480 --> 00:48:09,040
Speaker 16: forty units, maybe in places like Knoxville, maybe even rural America.

923
00:48:09,680 --> 00:48:12,560
Speaker 16: This kind of product is still starting and is still underway.

924
00:48:12,960 --> 00:48:16,240
Speaker 1: So July twenty six and September twenty or FED meetings

925
00:48:16,320 --> 00:48:18,759
Speaker 1: if they act, and it's I'm not going to say

926
00:48:18,840 --> 00:48:22,440
Speaker 1: highly likely, but it is probable that they'll find a

927
00:48:22,480 --> 00:48:25,839
Speaker 1: new rate regime at a higher level. What does that

928
00:48:26,040 --> 00:48:30,000
Speaker 1: do to multifamily real estate and for that matter, commercial

929
00:48:30,040 --> 00:48:32,799
Speaker 1: real estate that you study across America?

930
00:48:34,040 --> 00:48:37,160
Speaker 16: Right, So, obviously, just by keeping financing costs high, it's

931
00:48:37,160 --> 00:48:39,200
Speaker 16: going to have an impact on values. We've already seen

932
00:48:39,200 --> 00:48:41,520
Speaker 16: an impact on liquidity in the space, meaning we haven't

933
00:48:41,560 --> 00:48:44,600
Speaker 16: seen too many transactions. It's going to make further construction

934
00:48:44,760 --> 00:48:47,000
Speaker 16: a little bit more difficult, and we'll certainly lead to

935
00:48:47,040 --> 00:48:49,400
Speaker 16: some distress. Right now, it would appear that the distress

936
00:48:49,480 --> 00:48:51,640
Speaker 16: is really going to be in that construction and transitional

937
00:48:51,680 --> 00:48:54,959
Speaker 16: financing space maturities in the twenty twenty three through twenty

938
00:48:55,000 --> 00:48:57,600
Speaker 16: twenty five range if rates do say high like that,

939
00:48:57,840 --> 00:48:59,759
Speaker 16: and let's say we do hit a new regime of

940
00:49:00,200 --> 00:49:01,960
Speaker 16: you know, okay, the FED fund rate is going to

941
00:49:01,960 --> 00:49:03,520
Speaker 16: be at you know, three to four percent, you know,

942
00:49:03,560 --> 00:49:05,160
Speaker 16: in perpetuity, you know, with.

943
00:49:05,160 --> 00:49:07,440
Speaker 4: Bouts up and down. We would need to see an

944
00:49:07,440 --> 00:49:09,880
Speaker 4: inflationial environment that corresponds with that. So we need to

945
00:49:09,880 --> 00:49:11,799
Speaker 4: see rent growth or cheaper.

946
00:49:11,520 --> 00:49:14,880
Speaker 16: Inputs into the development process in order to see development

947
00:49:14,920 --> 00:49:15,640
Speaker 16: continue a pace.

948
00:49:15,719 --> 00:49:18,400
Speaker 1: On Bloomberg Surveillance, I'm radio on television. We're talking with

949
00:49:18,480 --> 00:49:21,960
Speaker 1: Brad Dillman of Atlanta, of Courtland where they do multifamily

950
00:49:22,040 --> 00:49:25,360
Speaker 1: housing and something. And I'm really remiss of as folks

951
00:49:25,560 --> 00:49:28,239
Speaker 1: we ignore this and it's completely a New York City

952
00:49:28,280 --> 00:49:31,360
Speaker 1: conceit and we should not. It's a huge part of

953
00:49:31,400 --> 00:49:34,040
Speaker 1: a discussion in America. I want to go demographic on

954
00:49:34,120 --> 00:49:36,360
Speaker 1: you right now, Brad Dillman. I'm going to be the

955
00:49:36,400 --> 00:49:39,080
Speaker 1: only one left on the island of Manhattan. Everybody else

956
00:49:39,200 --> 00:49:42,320
Speaker 1: is moving to Florida. Is that a cliche or is

957
00:49:42,360 --> 00:49:45,040
Speaker 1: there something actually true that we all got to move

958
00:49:45,080 --> 00:49:46,759
Speaker 1: down to Atlanta Braves baseball.

959
00:49:47,840 --> 00:49:49,840
Speaker 4: It certainly seems like everybody's moving to Florida.

960
00:49:49,880 --> 00:49:52,400
Speaker 16: Sometimes the reality is too when we look at some

961
00:49:52,440 --> 00:49:55,319
Speaker 16: of this information that we're saying that the migration to

962
00:49:55,360 --> 00:49:57,200
Speaker 16: the sunbell has actually slowed a little bit. We look

963
00:49:57,200 --> 00:49:59,000
Speaker 16: at cell phone data, we look at the census is

964
00:49:59,080 --> 00:50:02,359
Speaker 16: my you know, population and components of change tables. It's

965
00:50:02,400 --> 00:50:04,640
Speaker 16: still there. People are still moving, but it has slowed

966
00:50:04,680 --> 00:50:06,920
Speaker 16: down a bit. Something that we don't talk about, that

967
00:50:06,920 --> 00:50:08,520
Speaker 16: we don't hear a lot about is immigration.

968
00:50:08,920 --> 00:50:09,080
Speaker 6: Now.

969
00:50:09,120 --> 00:50:13,000
Speaker 16: Immigration has actually kicked off very strongly over the last

970
00:50:13,000 --> 00:50:15,040
Speaker 16: few years, only coming out of the pandemic. If you

971
00:50:15,120 --> 00:50:18,759
Speaker 16: look at the foreign born adult population, it's increasing nearly

972
00:50:18,800 --> 00:50:20,160
Speaker 16: five million people in three years.

973
00:50:20,360 --> 00:50:20,480
Speaker 14: Right.

974
00:50:20,520 --> 00:50:22,640
Speaker 16: That's bigger in the population of New Zealand. It's bigger

975
00:50:22,640 --> 00:50:25,560
Speaker 16: in the population of whole states like Oregon in twenty twenty.

976
00:50:25,880 --> 00:50:27,960
Speaker 16: This is a story for gateway markets, and what are

977
00:50:28,000 --> 00:50:31,040
Speaker 16: new gateway markets places like Atlanta and Front Range, which

978
00:50:31,080 --> 00:50:33,880
Speaker 16: are probably seeing as best we can tell more immigration,

979
00:50:34,480 --> 00:50:36,120
Speaker 16: fortunately than they would have historically, but.

980
00:50:36,080 --> 00:50:38,719
Speaker 1: This is a cret. I mean, everyone Brad in New

981
00:50:38,800 --> 00:50:41,560
Speaker 1: York City, of every walker life is talking about this,

982
00:50:41,760 --> 00:50:45,440
Speaker 1: the extraordinary expense of some of our major urban areas,

983
00:50:45,480 --> 00:50:48,920
Speaker 1: and there's other issues crime in that. I get it,

984
00:50:49,400 --> 00:50:53,520
Speaker 1: But there's this huge study of what our kids are doing.

985
00:50:54,160 --> 00:50:58,040
Speaker 1: Does Cortland have research that with the vengeance the younger crew,

986
00:50:58,920 --> 00:51:01,480
Speaker 1: they just simply can't have forward it and they're moving

987
00:51:01,520 --> 00:51:04,800
Speaker 1: down to a Courtland multifamily to rebuild their lives.

988
00:51:06,520 --> 00:51:07,200
Speaker 4: I don't know about that.

989
00:51:07,239 --> 00:51:09,719
Speaker 16: As far as people moving interstate, one thing that we

990
00:51:09,760 --> 00:51:11,360
Speaker 16: have seen in our own data has been that we

991
00:51:11,400 --> 00:51:14,600
Speaker 16: have been a beneficiary of people moving interstate. But whether

992
00:51:14,680 --> 00:51:16,600
Speaker 16: or not these are people are choosing to do that

993
00:51:16,680 --> 00:51:18,960
Speaker 16: in the sense that they have to do it right

994
00:51:19,000 --> 00:51:21,279
Speaker 16: because of their own personal form of situations not something

995
00:51:21,280 --> 00:51:23,360
Speaker 16: we have clarity on. We do know that the general

996
00:51:23,440 --> 00:51:25,719
Speaker 16: narratives that people are kind of bumping down the urban

997
00:51:25,800 --> 00:51:28,320
Speaker 16: hierarchy because of cost of living reasons.

998
00:51:28,560 --> 00:51:30,640
Speaker 1: BRED Thank you so much, generous of your time, Brat

999
00:51:30,680 --> 00:51:35,160
Speaker 1: Diliman of Courtland. Subscribe to the Bloomberg Surveillance podcast on Apple,

1000
00:51:35,360 --> 00:51:39,560
Speaker 1: Spotify and anywhere else you get your podcasts. Listen live

1001
00:51:39,719 --> 00:51:44,080
Speaker 1: every weekday starting at seven am Eastern on Bloomberg dot Com,

1002
00:51:44,120 --> 00:51:48,320
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business App.

1003
00:51:48,760 --> 00:51:52,440
Speaker 1: You can watch us live on Bloomberg Television and always.

1004
00:51:52,800 --> 00:51:56,640
Speaker 1: I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen,

1005
00:51:56,880 --> 00:52:07,640
Speaker 1: and this is Bloomberg. Thanks for listening to the Bloomberg

1006
00:52:07,719 --> 00:52:12,320
Speaker 1: Surveillance podcast. Now, stay tuned for today's edition of Bloomberg Daybreak.

1007
00:52:12,360 --> 00:52:16,160
Speaker 1: It's your daily news podcast, delivering today's top stories to

1008
00:52:16,200 --> 00:52:19,680
Speaker 1: your podcast feed by six am Eastern. It's all the

1009
00:52:19,719 --> 00:52:24,680
Speaker 1: news you need in just fifteen minutes. The Bloomberg Daybreak Podcast.

1010
00:52:24,880 --> 00:52:29,719
Speaker 1: It starts right now.

1011
00:52:29,400 --> 00:52:33,120
Speaker 17: From the Bloomberg Interactive Burgers Studios. This is Bloomberg Daybreak

1012
00:52:33,160 --> 00:52:34,839
Speaker 17: for Friday, June twenty third.

1013
00:52:35,000 --> 00:52:38,200
Speaker 18: Coming up today, the search for the missing Titanic sub

1014
00:52:38,280 --> 00:52:39,680
Speaker 18: comes to a tragic end.

1015
00:52:39,920 --> 00:52:42,760
Speaker 17: Global stocks are on track for their biggest weekly decline

1016
00:52:42,880 --> 00:52:43,640
Speaker 17: in three months.

1017
00:52:43,760 --> 00:52:47,600
Speaker 18: Janet Yellen says the risk of a US recession is receding.

1018
00:52:47,320 --> 00:52:50,799
Speaker 17: And Citygroup has a warning for employees on office attendance.

1019
00:52:51,120 --> 00:52:54,080
Speaker 14: A section of I ninety five that collapsed in Philadelphia

1020
00:52:54,120 --> 00:52:58,120
Speaker 14: reopens today. Plus Congressvin Santos slams a judge for revealing

1021
00:52:58,160 --> 00:53:01,239
Speaker 14: the names behind posting his bond. I'm Michael barr bo.

1022
00:53:01,400 --> 00:53:02,759
Speaker 6: Ahead, I'm Don stave Shower.

1023
00:53:02,880 --> 00:53:05,239
Speaker 19: Sports a lopsided loss to the Yankees. The Mets to

1024
00:53:05,320 --> 00:53:08,719
Speaker 19: night visit Philadelphia. They held the NBA Draft in Brooklyn.

1025
00:53:10,440 --> 00:53:13,840
Speaker 10: That's all straight ahead on Bloomberg day Break, the business

1026
00:53:13,880 --> 00:53:16,359
Speaker 10: news you need to start your day in just one

1027
00:53:16,480 --> 00:53:20,960
Speaker 10: fifteen minute podcast each morning on Apple Spotify. The Bloomberg

1028
00:53:21,000 --> 00:53:23,640
Speaker 10: Business Appen everywhere you get your podcasts.

1029
00:53:26,640 --> 00:53:28,480
Speaker 18: Good morning, I'm Nathan Hager.

1030
00:53:28,320 --> 00:53:31,560
Speaker 17: And I'm Karen Moscow. Here are the stories we're following today.

1031
00:53:32,440 --> 00:53:34,840
Speaker 18: First, we begin with a tragic end to the search

1032
00:53:34,880 --> 00:53:38,640
Speaker 18: for that submersible it was exploring the Titanic. Rescuers have

1033
00:53:38,680 --> 00:53:41,960
Speaker 18: found the nose cone and other debris from the vessel,

1034
00:53:42,040 --> 00:53:45,080
Speaker 18: known as the Titan. Coast Guard Rear Admiral John Monger

1035
00:53:45,120 --> 00:53:47,399
Speaker 18: says the five people on board are dead.

1036
00:53:47,840 --> 00:53:53,840
Speaker 20: In consultation with experts from within the Unified Command, the

1037
00:53:53,960 --> 00:54:00,000
Speaker 20: debris is consistent with the catastrophic loss of the pressure chain.

1038
00:54:00,480 --> 00:54:02,920
Speaker 18: Rear Admiral John Mauger says they're going to keep collecting

1039
00:54:02,920 --> 00:54:06,400
Speaker 18: information to determine the cause. Of that implosion. Bloomberg News

1040
00:54:06,440 --> 00:54:10,160
Speaker 18: has learned the US Navy detected the implosion on Sunday

1041
00:54:10,239 --> 00:54:13,240
Speaker 18: at the site where the Titan loss communications. A senior

1042
00:54:13,320 --> 00:54:16,080
Speaker 18: Navy official says a decision was made to continue the

1043
00:54:16,120 --> 00:54:19,320
Speaker 18: search and rescue, to make every effort to save lives.

1044
00:54:19,960 --> 00:54:22,439
Speaker 17: Well, Nathan, we turn now to the nation's capital, where

1045
00:54:22,440 --> 00:54:26,040
Speaker 17: geopolitics and foreign relations are in focus. It was a

1046
00:54:26,040 --> 00:54:29,600
Speaker 17: red carpet welcome for India's Prime Minister as Narendra Mody

1047
00:54:29,680 --> 00:54:32,520
Speaker 17: met with President Biden at the White House yesterday. A

1048
00:54:32,640 --> 00:54:36,680
Speaker 17: joint press conference was followed by Modi addressing Congress. Amy

1049
00:54:36,719 --> 00:54:39,440
Speaker 17: Morris has Moore from our Bloomberg ninety nine one newsroom

1050
00:54:39,480 --> 00:54:40,160
Speaker 17: in Washington.

1051
00:54:40,280 --> 00:54:43,359
Speaker 21: President Biden in Prime Minister Mody announced a series of

1052
00:54:43,400 --> 00:54:47,160
Speaker 21: defense and commercial deals designed to improve military and economic

1053
00:54:47,200 --> 00:54:50,560
Speaker 21: ties between the two nations during yesterday's state visit at

1054
00:54:50,560 --> 00:54:53,279
Speaker 21: the White House. Later, Mody made a rare address to

1055
00:54:53,320 --> 00:54:56,680
Speaker 21: a joint meeting of Congress, where he stressed the importance

1056
00:54:56,840 --> 00:55:03,480
Speaker 21: of democracy, the beauty of democracy in the constant connect

1057
00:55:04,360 --> 00:55:08,400
Speaker 21: with the people to listen to them. At least seventy

1058
00:55:08,480 --> 00:55:11,880
Speaker 21: lawmakers called on President Biden to address human rights violations

1059
00:55:11,880 --> 00:55:15,359
Speaker 21: in India. Still, Mody was met with applause on Capitol Hill.

1060
00:55:15,560 --> 00:55:17,880
Speaker 21: The evening ended with a state dinner at the White

1061
00:55:17,880 --> 00:55:20,800
Speaker 21: House in Washington. I'm Amy Morris Bloomberg Daybreak.

1062
00:55:20,840 --> 00:55:23,160
Speaker 18: Thank you Amy. At that joint news conference with Prime

1063
00:55:23,239 --> 00:55:27,560
Speaker 18: Minister Modi, President Biden also addressed relations with China, answering

1064
00:55:27,640 --> 00:55:30,240
Speaker 18: questions about this week's comment where he referred to Chinese

1065
00:55:30,320 --> 00:55:32,600
Speaker 18: President Shi Jinping as a dictator.

1066
00:55:33,080 --> 00:55:39,720
Speaker 22: We had an incident that caused some confusion, he might say,

1067
00:55:40,600 --> 00:55:43,120
Speaker 22: but President, but the Secretary of Blincoln had a great

1068
00:55:43,160 --> 00:55:47,600
Speaker 22: trip to China. I expect to be meeting with President

1069
00:55:47,640 --> 00:55:51,719
Speaker 22: she sometime in the future a near term, and I

1070
00:55:51,760 --> 00:55:54,440
Speaker 22: don't think it's had any real consequence.

1071
00:55:54,480 --> 00:55:57,120
Speaker 18: All those sentiments from President Biden do not appear to

1072
00:55:57,160 --> 00:55:59,880
Speaker 18: be shared by China. A spokesman for the Chinese embassy

1073
00:56:00,080 --> 00:56:04,280
Speaker 18: as the President's remarks were quote erroneous, absurd, and irresponsible.

1074
00:56:04,600 --> 00:56:06,520
Speaker 17: Well, we turned to the markets now, Nathan, and we're

1075
00:56:06,560 --> 00:56:09,680
Speaker 17: seeing global stocks had for their biggest weekly decline in

1076
00:56:09,719 --> 00:56:12,919
Speaker 17: more than three months. Concerns of our higher interest rates

1077
00:56:12,920 --> 00:56:15,200
Speaker 17: appear to be the catalyst. At the same time, are

1078
00:56:15,239 --> 00:56:18,760
Speaker 17: getting a positive outlook from the Treasury Secretary Jenet Yellen

1079
00:56:18,960 --> 00:56:22,000
Speaker 17: says the risk of a US recession is declining. We

1080
00:56:22,080 --> 00:56:24,080
Speaker 17: get more from Bloomberg's Dunk Prisner.

1081
00:56:24,480 --> 00:56:27,080
Speaker 23: In an interview with Bloomberg News, Yellen said the odds

1082
00:56:27,080 --> 00:56:29,920
Speaker 23: of recession, if anything, have gone down. That's because of

1083
00:56:29,960 --> 00:56:33,160
Speaker 23: a tight labor market and inflation coming down. When it

1084
00:56:33,200 --> 00:56:35,919
Speaker 23: comes to consumption, Yellen said we probably need to see

1085
00:56:35,920 --> 00:56:38,360
Speaker 23: some slow down in spending in order to get inflation

1086
00:56:38,520 --> 00:56:41,799
Speaker 23: under control. She said the core measure of price increases

1087
00:56:41,880 --> 00:56:44,560
Speaker 23: is quite high. Yellen also said we could have a

1088
00:56:44,600 --> 00:56:47,680
Speaker 23: lovely debate about what the inflation target would be, but

1089
00:56:47,719 --> 00:56:50,279
Speaker 23: this is not the time for that debate. Fedcher J.

1090
00:56:50,440 --> 00:56:53,440
Speaker 23: Powell has rejected the idea of entertaining a change in

1091
00:56:53,480 --> 00:56:57,279
Speaker 23: the two percent target sentiment. He reiterated before Congress this

1092
00:56:57,360 --> 00:56:59,960
Speaker 23: week in New York. I'm Doug Prisoner Bloomberg Daybreak.

1093
00:57:00,200 --> 00:57:02,479
Speaker 18: Thank you, Doug. Speaking of Jay Powell, the Fed chairs

1094
00:57:02,480 --> 00:57:05,480
Speaker 18: wrapped up his semi annual testimony to Congress, and yesterday

1095
00:57:05,560 --> 00:57:08,480
Speaker 18: saw Pale weighing in on the banking crisis. He says

1096
00:57:08,520 --> 00:57:12,120
Speaker 18: Wall Street's biggest lenders may have to increase capital requirements

1097
00:57:12,160 --> 00:57:13,320
Speaker 18: by twenty percent.

1098
00:57:14,040 --> 00:57:17,840
Speaker 24: The capital requirements will be very very skewed to the

1099
00:57:18,200 --> 00:57:21,440
Speaker 24: eight largest banks. The jesips there may be some capital

1100
00:57:21,720 --> 00:57:23,520
Speaker 24: increases for the other banks, and they won't.

1101
00:57:23,840 --> 00:57:24,120
Speaker 14: I'm not.

1102
00:57:24,320 --> 00:57:26,320
Speaker 24: I think none of this should affect banks under one

1103
00:57:26,360 --> 00:57:26,880
Speaker 24: hundred billion.

1104
00:57:26,960 --> 00:57:29,560
Speaker 18: Pal made those comments before the Senate Banking Committee as

1105
00:57:29,560 --> 00:57:32,000
Speaker 18: he wrapped up two days of congressional testimony.

1106
00:57:32,400 --> 00:57:35,040
Speaker 17: Sticking with the banking sector, plenty of other news to

1107
00:57:35,080 --> 00:57:37,760
Speaker 17: catch you up on this morning. Nathan Blackrock says it's

1108
00:57:37,800 --> 00:57:40,520
Speaker 17: cutting staff. The firm says it's shifting its budget to

1109
00:57:40,520 --> 00:57:44,240
Speaker 17: support critical priorities. Blackrock says the move will affect less

1110
00:57:44,240 --> 00:57:46,320
Speaker 17: than one percent of employees.

1111
00:57:45,880 --> 00:57:47,840
Speaker 18: And City Group's ramping up. It's pushed to get its

1112
00:57:47,880 --> 00:57:50,600
Speaker 18: workers back in the office. Karen, The firm's telling managers

1113
00:57:50,600 --> 00:57:53,320
Speaker 18: to let staff know they will face consequences if they

1114
00:57:53,360 --> 00:57:56,960
Speaker 18: don't comply with office attendance policies. We get the details

1115
00:57:57,000 --> 00:57:58,480
Speaker 18: from Bloomberg's Charlie Pellett.

1116
00:57:58,840 --> 00:58:02,400
Speaker 25: Sources tell Bloomberg. While the vast majority of staffers are

1117
00:58:02,520 --> 00:58:06,200
Speaker 25: following the firm's rules for hybrid work, the moves are

1118
00:58:06,240 --> 00:58:11,520
Speaker 25: focused on those employees with persistent, unexplained absences. A source

1119
00:58:11,560 --> 00:58:15,280
Speaker 25: as managers will consider compliance with the rules when rating

1120
00:58:15,320 --> 00:58:19,720
Speaker 25: performance and crafting pay packages. City Group is widely seen

1121
00:58:19,800 --> 00:58:23,040
Speaker 25: as to be among the most amenable financial firms when

1122
00:58:23,040 --> 00:58:26,760
Speaker 25: it comes to flexible work arrangements. Following the COVID nineteen

1123
00:58:26,840 --> 00:58:30,920
Speaker 25: pandemic in New York, Charlie Pellett Bloomberg Daybreak.

1124
00:58:31,040 --> 00:58:33,080
Speaker 17: All right, Charlie, thanks well. Another big bank has made

1125
00:58:33,120 --> 00:58:36,680
Speaker 17: a settlement involving litigation over Jeffrey Epstein. JP Morgan has

1126
00:58:36,720 --> 00:58:38,920
Speaker 17: agreed to pay two hundred and ninety million dollars to

1127
00:58:38,960 --> 00:58:43,080
Speaker 17: settle a lawsuit alleging it knowingly benefited from Epstein's sex trafficking.

1128
00:58:43,320 --> 00:58:45,600
Speaker 17: The deal has been okayed by the lead plaintiff, but

1129
00:58:45,800 --> 00:58:48,400
Speaker 17: must still be approved by a judge. Last month, Deutsche

1130
00:58:48,400 --> 00:58:50,760
Speaker 17: Bank agreed to pay seventy five million dollars to settle

1131
00:58:50,800 --> 00:58:52,680
Speaker 17: its Epstein related lawsuit.

1132
00:58:52,320 --> 00:58:55,200
Speaker 18: And the settlement's been reached. In the first US Zantac

1133
00:58:55,480 --> 00:58:58,400
Speaker 18: cancer law sup British drugmaker GSKS reached a deal with

1134
00:58:58,440 --> 00:59:00,840
Speaker 18: a man who claimed the drug maker's heart burnt medication

1135
00:59:01,040 --> 00:59:08,800
Speaker 18: caused his cancer. This is Bloomberg, and now it's time

1136
00:59:08,840 --> 00:59:10,360
Speaker 18: to take a look at some of the other stories

1137
00:59:10,400 --> 00:59:13,320
Speaker 18: making news in New York and around the world. Good Morning,

1138
00:59:13,360 --> 00:59:14,560
Speaker 18: Michael barn Good morning.

1139
00:59:14,640 --> 00:59:17,920
Speaker 14: Nathan pen Dot says the temporary lanes of I ninety

1140
00:59:17,920 --> 00:59:21,520
Speaker 14: five will reopen today in Philadelphia. Cruz have been working

1141
00:59:21,560 --> 00:59:25,200
Speaker 14: twenty four to seven since the portion of the interstate collapsed.

1142
00:59:25,200 --> 00:59:29,080
Speaker 14: On June eleventh, Transportation Secretary Mike Carroll reached out to

1143
00:59:29,360 --> 00:59:32,040
Speaker 14: Ricky Durst at the Pocono Raceway to see if the

1144
00:59:32,080 --> 00:59:35,800
Speaker 14: state could use its dryer to keep moisture off the road.

1145
00:59:36,160 --> 00:59:37,480
Speaker 1: It is a jet engine.

1146
00:59:37,680 --> 00:59:41,120
Speaker 22: It's gonna blow out about fourteen hundred at fourteen hundred

1147
00:59:41,120 --> 00:59:41,960
Speaker 22: three spahrenheit.

1148
00:59:42,480 --> 00:59:45,720
Speaker 2: It's about three pounds of forty, As the.

1149
00:59:45,640 --> 00:59:49,520
Speaker 22: Secretary says, it's buckled into a shabby Silverado, so it's

1150
00:59:49,560 --> 00:59:51,200
Speaker 22: a little bit of Frankenstein theme.

1151
00:59:51,720 --> 00:59:55,240
Speaker 14: Pen Dot says during the asphalt paving there were concerns

1152
00:59:55,280 --> 00:59:59,280
Speaker 14: that rain would hold up repair crews. A judge just

1153
00:59:59,320 --> 01:00:02,200
Speaker 14: blocked Wyomi first in the nation ban on abortion pills

1154
01:00:02,240 --> 01:00:05,440
Speaker 14: before it was set to be implemented July first. Several

1155
01:00:05,440 --> 01:00:09,280
Speaker 14: states have banned abortion outright or restricted access to abortion pills.

1156
01:00:09,560 --> 01:00:12,800
Speaker 14: The ruling comes just ahead of the one year anniversary

1157
01:00:13,120 --> 01:00:16,320
Speaker 14: of the Supreme Court, essentially overturning Roe v. Wade in

1158
01:00:16,440 --> 01:00:20,320
Speaker 14: battle Congressman George Santos is slamming a judge for revealing

1159
01:00:20,360 --> 01:00:23,040
Speaker 14: his father and aunts were the ones who co signed

1160
01:00:23,080 --> 01:00:24,760
Speaker 14: a bail bond to keep him out of jail.

1161
01:00:25,160 --> 01:00:29,480
Speaker 18: My whole thing around keeping the sureties secret.

1162
01:00:29,640 --> 01:00:32,440
Speaker 6: What's for their safety? Because of the death threats I.

1163
01:00:32,400 --> 01:00:35,000
Speaker 18: Get, I can handle that I ran for public office,

1164
01:00:35,040 --> 01:00:36,600
Speaker 18: stated not you're private citizens.

1165
01:00:37,160 --> 01:00:40,600
Speaker 2: Ones a United States Postal worker, the other ones a painter.

1166
01:00:41,360 --> 01:00:44,480
Speaker 14: A request granted to when seal court records revealed the

1167
01:00:44,480 --> 01:00:47,680
Speaker 14: Long Island Republican's father and on co signed the five

1168
01:00:47,920 --> 01:00:52,320
Speaker 14: hundred thousand dollars bond that enabled Santos's release as he

1169
01:00:52,360 --> 01:00:56,320
Speaker 14: awaits trial on federal charges of fraud, money laundering, and

1170
01:00:56,400 --> 01:00:59,520
Speaker 14: theft of public funds. Prosecutors in New Mexico filed a

1171
01:00:59,520 --> 01:01:02,520
Speaker 14: new charge against the armorer on the set of the

1172
01:01:02,560 --> 01:01:07,200
Speaker 14: movie rust Annagutierras Reed is now accused of evidence tampering

1173
01:01:07,480 --> 01:01:10,680
Speaker 14: related to narcotics in connection with the fatal shooting of

1174
01:01:10,720 --> 01:01:15,400
Speaker 14: cinematographer Helena Hutchins. The FDA is doubling down on banning

1175
01:01:15,480 --> 01:01:19,760
Speaker 14: e cigarettes. It's warning store owners stop selling fruit and

1176
01:01:19,920 --> 01:01:23,800
Speaker 14: candy flavored vapes, saying they pose a danger to young people,

1177
01:01:24,200 --> 01:01:26,920
Speaker 14: Global news twenty four hours a day, powered by more

1178
01:01:26,960 --> 01:01:30,320
Speaker 14: than twenty seven hundred journalists and analysts in over one

1179
01:01:30,440 --> 01:01:34,040
Speaker 14: hundred twenty countries. I'm Michael Barr, and this is Bloomberg. Nathan.

1180
01:01:34,040 --> 01:01:35,120
Speaker 1: All right, Michael, thank you.

1181
01:01:39,720 --> 01:01:42,520
Speaker 18: Time now for the Bloomberg Sports Update with John Stashauer.

1182
01:01:42,560 --> 01:01:44,600
Speaker 19: All right, Nathan, and the Yankee game pretty much over

1183
01:01:44,640 --> 01:01:46,520
Speaker 19: before the Yanks came to the plate. They were already

1184
01:01:46,560 --> 01:01:49,720
Speaker 19: chilling Seattle four nothie. Mariners then scored twice in each

1185
01:01:49,760 --> 01:01:51,880
Speaker 19: of the next three innings. It was ten to enough

1186
01:01:51,880 --> 01:01:54,840
Speaker 19: it until in Isaiah Connor Fillff at two run homer

1187
01:01:54,920 --> 01:01:58,240
Speaker 19: bottom of the ninth. Ikf had pitched a perfect top

1188
01:01:58,280 --> 01:02:00,400
Speaker 19: of the ninth. Mariners won ten to two. Of getting

1189
01:02:00,400 --> 01:02:03,600
Speaker 19: swept Yankees os Texas tonight. Mets are in Philadelphia. They

1190
01:02:03,600 --> 01:02:05,800
Speaker 19: had good success with the Phillis last season, and they

1191
01:02:05,840 --> 01:02:08,080
Speaker 19: swept them a few weeks ago. But since that sweep,

1192
01:02:08,480 --> 01:02:11,000
Speaker 19: the Phillies have gone thirteen and four and the Mets

1193
01:02:11,040 --> 01:02:13,600
Speaker 19: have gone four and thirteen. The Jets back in March

1194
01:02:13,640 --> 01:02:16,960
Speaker 19: acquired veteran safety Chuck Clark from Baltimore. He tore his

1195
01:02:17,000 --> 01:02:19,880
Speaker 19: acl an off season practice. He'll miss the season, can

1196
01:02:19,960 --> 01:02:22,680
Speaker 19: Victor wem ben Yama live up to a tremendous amount

1197
01:02:22,680 --> 01:02:25,439
Speaker 19: of five nineteen years old from France, seven foot four,

1198
01:02:25,560 --> 01:02:29,760
Speaker 19: best NBA prospects since Lebron James drafted first overall by

1199
01:02:29,760 --> 01:02:32,520
Speaker 19: San Antonio and focusing on team goals.

1200
01:02:32,520 --> 01:02:35,560
Speaker 8: Some prers have tried to win the championship, win a

1201
01:02:35,640 --> 01:02:38,400
Speaker 8: ring for years and haven't made it, And I want to.

1202
01:02:38,800 --> 01:02:41,160
Speaker 8: I don't want to be one of those, you know,

1203
01:02:41,560 --> 01:02:44,680
Speaker 8: so you know the this is gonna be. My goal

1204
01:02:44,840 --> 01:02:47,520
Speaker 8: is going to be to get closer and closer every

1205
01:02:47,520 --> 01:02:48,560
Speaker 8: time to the ring.

1206
01:02:48,840 --> 01:02:51,920
Speaker 19: Charlotte with the second Cook took Alabama's Brandon Millard. Portland

1207
01:02:51,960 --> 01:02:54,040
Speaker 19: followed with Stude Henderson who played in the G League,

1208
01:02:54,040 --> 01:02:57,040
Speaker 19: and then Houston and Detroit and consecutive picks took twin

1209
01:02:57,080 --> 01:02:59,440
Speaker 19: brothers a men in Astair Thompson. The Nets back to

1210
01:02:59,480 --> 01:03:03,000
Speaker 19: back first picks took Noah Clowney from Alabama, then Dukes

1211
01:03:03,040 --> 01:03:06,080
Speaker 19: Derek Whitehead another big NBA trade. Chris Paul now goes

1212
01:03:06,080 --> 01:03:10,120
Speaker 19: from Washington to Golden State for Jordan Poole. Travelers Golf

1213
01:03:10,160 --> 01:03:12,880
Speaker 19: near Hard for Jenny McCarthy leads by two. Rory McElroy

1214
01:03:12,960 --> 01:03:15,840
Speaker 19: trails by eight, when McElroy had the first hole in

1215
01:03:15,960 --> 01:03:19,960
Speaker 19: one of his pro career John stash that went Bloomberg Sports.

1216
01:03:21,800 --> 01:03:24,840
Speaker 10: From coast to coast, from New York to San Francisco,

1217
01:03:25,160 --> 01:03:29,800
Speaker 10: Boston to Washington, DC, nationwide on Syrias exam the Bloomberg

1218
01:03:29,840 --> 01:03:34,000
Speaker 10: Business app in Bloomberg dot Com. This is Bloomberg Day Break.

1219
01:03:35,040 --> 01:03:38,360
Speaker 18: Good morning, I'm Nathan Hager. With the explosion of chat

1220
01:03:38,400 --> 01:03:41,680
Speaker 18: GPT over the past year, companies are looking to implement

1221
01:03:41,800 --> 01:03:46,480
Speaker 18: artificial intelligence across their businesses. But what will the future

1222
01:03:46,560 --> 01:03:50,320
Speaker 18: look like with AI in it? Open AI CEO and

1223
01:03:50,360 --> 01:03:53,040
Speaker 18: co founder Sam Altman joined our Emily Chang at the

1224
01:03:53,080 --> 01:03:58,520
Speaker 18: Bloomberg Technology Summit. They discussed existential questions about AI and

1225
01:03:58,600 --> 01:04:02,320
Speaker 18: what should be done to regular this powerful technology. Let's

1226
01:04:02,320 --> 01:04:03,800
Speaker 18: listen in to part of that discussion.

1227
01:04:03,880 --> 01:04:07,760
Speaker 26: Now, there's many ways it could go wrong, but we

1228
01:04:08,320 --> 01:04:12,000
Speaker 26: work with powerful technology that can be used in dangerous

1229
01:04:12,040 --> 01:04:17,320
Speaker 26: ways very frequently in the world, and I think we've

1230
01:04:17,360 --> 01:04:23,040
Speaker 26: developed over the decades good safety system practices in many categories.

1231
01:04:23,640 --> 01:04:25,480
Speaker 26: It's not perfect, and this won't be perfect either. Things

1232
01:04:25,520 --> 01:04:28,000
Speaker 26: will go wrong, but I think we'll be able to

1233
01:04:28,040 --> 01:04:31,600
Speaker 26: mitigate some of the worst scenarios. You could imagine, you know,

1234
01:04:31,640 --> 01:04:35,320
Speaker 26: bioterror is like a common example, cybersecurities another like many

1235
01:04:35,400 --> 01:04:38,360
Speaker 26: more we could talk about. But the main thing that

1236
01:04:38,480 --> 01:04:42,080
Speaker 26: I feel is important about this technology is that we

1237
01:04:42,120 --> 01:04:45,200
Speaker 26: are on an exponential curve and a relatively steep one,

1238
01:04:45,640 --> 01:04:49,640
Speaker 26: and human intuition for exponential curves is like really bad

1239
01:04:50,240 --> 01:04:52,960
Speaker 26: in general. It clearly was not that important in our

1240
01:04:52,960 --> 01:04:56,440
Speaker 26: evolutionary history, and so I think we have to given

1241
01:04:56,480 --> 01:04:58,120
Speaker 26: that we all have that weakness. I think we have

1242
01:04:58,160 --> 01:05:01,040
Speaker 26: to like really push ourselves to say, okay, GPT four

1243
01:05:01,840 --> 01:05:04,000
Speaker 26: you know not at risk like you're talking about there,

1244
01:05:04,320 --> 01:05:07,080
Speaker 26: but how sure we the GPT nine won't be And

1245
01:05:07,240 --> 01:05:09,560
Speaker 26: if it might be, even if there's a small percentage

1246
01:05:09,640 --> 01:05:11,200
Speaker 26: chance of it being really bad, like that.

1247
01:05:11,120 --> 01:05:11,919
Speaker 2: Deserves great care.

1248
01:05:12,280 --> 01:05:15,480
Speaker 27: And if there is that small percentage chance, why keep.

1249
01:05:15,280 --> 01:05:15,880
Speaker 11: Doing this at all?

1250
01:05:15,960 --> 01:05:19,240
Speaker 26: Like why not stop a I think that the upsides

1251
01:05:19,240 --> 01:05:23,040
Speaker 26: here are tremendous, you know, opportunity for everyone on earth

1252
01:05:23,080 --> 01:05:27,080
Speaker 26: to have a better quality education than basically anyone can

1253
01:05:27,120 --> 01:05:30,680
Speaker 26: get today. That seems like really important, and that'd be

1254
01:05:30,680 --> 01:05:33,800
Speaker 26: a bad thing to stop medical care And what's I

1255
01:05:33,800 --> 01:05:36,320
Speaker 26: think going to happen there and making that available, like

1256
01:05:36,360 --> 01:05:40,040
Speaker 26: truly globally. That's going to be transformative, the scientific progress

1257
01:05:40,080 --> 01:05:42,160
Speaker 26: we're going to see. I'm a big believer that, like,

1258
01:05:42,480 --> 01:05:46,400
Speaker 26: real sustainable improvements in quality of life come from scientific

1259
01:05:46,480 --> 01:05:48,840
Speaker 26: and technological progress, and I think we're gonna have a

1260
01:05:48,880 --> 01:05:49,360
Speaker 26: lot more of that.

1261
01:05:50,040 --> 01:05:50,760
Speaker 6: So there are all the.

1262
01:05:50,760 --> 01:05:54,240
Speaker 26: Obvious benefits, and you know, like I think it'd be

1263
01:05:54,240 --> 01:05:56,520
Speaker 26: good to end poverty, Like maybe you think we should

1264
01:05:56,520 --> 01:05:58,560
Speaker 26: stop a technology that can do that. I personally don't,

1265
01:05:58,880 --> 01:06:00,720
Speaker 26: but we got to manage through the risk to get there.

1266
01:06:01,200 --> 01:06:05,640
Speaker 26: I also think at this point, given how much people

1267
01:06:05,720 --> 01:06:09,920
Speaker 26: see the economic benefits and potential, no company could stop it.

1268
01:06:10,560 --> 01:06:13,800
Speaker 26: But global regulation, which I only think should be on

1269
01:06:13,880 --> 01:06:18,400
Speaker 26: these like powerful existential risk level systems. Global regulation is hard,

1270
01:06:18,760 --> 01:06:21,280
Speaker 26: and you know you don't want to overdo it for sure,

1271
01:06:21,680 --> 01:06:24,760
Speaker 26: but I think global regulation can help make it safe,

1272
01:06:24,920 --> 01:06:26,760
Speaker 26: which is a better answer than stopping it. I also

1273
01:06:26,800 --> 01:06:27,959
Speaker 26: don't think stopping it would work.

1274
01:06:28,120 --> 01:06:30,840
Speaker 27: Let's talk about the global regulation. You've been around the

1275
01:06:30,840 --> 01:06:33,440
Speaker 27: world meeting with regulators, you met with President Biden and

1276
01:06:33,480 --> 01:06:37,560
Speaker 27: the CEOs of Microsoft and Google, and you're calling for regulation,

1277
01:06:37,680 --> 01:06:41,360
Speaker 27: but with some caveats. The critics say it sounds like

1278
01:06:41,400 --> 01:06:44,480
Speaker 27: you're saying regulate us but not really, or that you

1279
01:06:44,720 --> 01:06:48,800
Speaker 27: are calling for regulation in public but lobbying for something

1280
01:06:48,840 --> 01:06:49,720
Speaker 27: else in private.

1281
01:06:49,880 --> 01:06:51,120
Speaker 18: How would you respond.

1282
01:06:50,760 --> 01:06:54,520
Speaker 26: To that we're pushing for it in private too. I mean, obviously,

1283
01:06:54,560 --> 01:06:57,800
Speaker 26: like we have some opinions about the ways to do

1284
01:06:57,840 --> 01:07:01,240
Speaker 26: it that'll be effective and it'll be ineffective. We for example,

1285
01:07:01,320 --> 01:07:04,280
Speaker 26: don't think small startups and open source models below a

1286
01:07:04,320 --> 01:07:08,120
Speaker 26: certain very high capability threshold should be subject to a

1287
01:07:08,120 --> 01:07:12,320
Speaker 26: lot of regulation. But also we think it is super

1288
01:07:12,400 --> 01:07:14,840
Speaker 26: important that as we think about a system that could

1289
01:07:14,880 --> 01:07:17,280
Speaker 26: be at a risk level, like you were talking about, that,

1290
01:07:17,600 --> 01:07:22,560
Speaker 26: we have a global and as a coordinated response as possible.

1291
01:07:22,720 --> 01:07:25,400
Speaker 26: So we've been talking about that publicly privately I think

1292
01:07:25,440 --> 01:07:28,480
Speaker 26: it's really important. You know, you could like point out

1293
01:07:28,520 --> 01:07:32,880
Speaker 26: that it's we're like trying to do regulatory capture here

1294
01:07:32,960 --> 01:07:35,840
Speaker 26: or whatever, but I just don't. I think that's like

1295
01:07:35,920 --> 01:07:39,280
Speaker 26: so transparently intellectually dishonest. I don't even know how to respond.

1296
01:07:40,440 --> 01:07:43,520
Speaker 27: You have an incredible amount of power at this moment

1297
01:07:43,560 --> 01:07:43,960
Speaker 27: in time.

1298
01:07:44,560 --> 01:07:47,200
Speaker 26: Why should we trust you?

1299
01:07:47,200 --> 01:07:47,840
Speaker 1: You shouldn't?

1300
01:07:48,360 --> 01:07:51,120
Speaker 26: You know me for a long time public talking like

1301
01:07:51,160 --> 01:07:54,040
Speaker 26: I'd rather be in the office working, But I think

1302
01:07:54,160 --> 01:07:57,520
Speaker 26: at this moment in time, like people deserve basically as

1303
01:07:57,600 --> 01:08:00,400
Speaker 26: much time asking questions as they want. I'm trying to

1304
01:08:00,400 --> 01:08:02,760
Speaker 26: show up and do it. But more to that, like,

1305
01:08:02,840 --> 01:08:05,760
Speaker 26: no one person should be trusted here. I don't have

1306
01:08:05,800 --> 01:08:09,240
Speaker 26: super voting shares. I don't want them. The board can

1307
01:08:09,280 --> 01:08:11,480
Speaker 26: fire me. I think that's important. I think the board

1308
01:08:11,520 --> 01:08:15,040
Speaker 26: over time needs to get like democratized to all of humanity.

1309
01:08:15,040 --> 01:08:17,759
Speaker 26: There's many ways that could be implemented. But the reason

1310
01:08:17,800 --> 01:08:20,120
Speaker 26: for our structure, and the reason it's so weird, is

1311
01:08:20,240 --> 01:08:23,320
Speaker 26: we think this technology, the benefits, the access to it,

1312
01:08:23,360 --> 01:08:25,720
Speaker 26: the governance of it, belongs to humanity.

1313
01:08:25,400 --> 01:08:25,880
Speaker 2: As a whole.

1314
01:08:26,320 --> 01:08:29,120
Speaker 26: If this really works, it's like quite a powerful technology,

1315
01:08:29,120 --> 01:08:31,600
Speaker 26: and you should not trust one company and certainly not

1316
01:08:31,680 --> 01:08:32,160
Speaker 26: one person.

1317
01:08:34,880 --> 01:08:37,960
Speaker 18: This is Bloomberg Daybreak Today, your morning brief on the

1318
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Speaker 18: story's making news from Wall Street to Washington and beyond.

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01:08:41,680 --> 01:08:44,439
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1320
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1323
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1324
01:08:54,920 --> 01:08:57,800
Speaker 18: in New York, Bloomberg ninety nine to one in Washington,

1325
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Speaker 18: Bloomberg one oh six's one in Boston and Bloomberg nine

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1327
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01:09:14,720 --> 01:09:18,680
Speaker 18: XM Channel one nineteen, the iHeartRadio app, and on Bloomberg

1331
01:09:18,760 --> 01:09:19,360
Speaker 18: dot com.

1332
01:09:19,400 --> 01:09:20,639
Speaker 1: I'm Nathan Hager and.

1333
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Speaker 17: I'm Karen Moscow. Join us again tomorrow morning for all

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Speaker 17: the news you need to start your day right here

1335
01:09:26,600 --> 01:09:27,879
Speaker 17: on Bloomberg Daybreak